Bulletin No. 2008-12 HIGHLIGHTS OF THIS ISSUE · Bulletin No. 2008-12 March 24, 2008 HIGHLIGHTS OF...

Bulletin No. 2008-12March 24, 2008

HIGHLIGHTSOF THIS ISSUEThese synopses are intended only as aids to the reader inidentifying the subject matter covered. They may not berelied upon as authoritative interpretations.

INCOME TAX

Rev. Rul. 2008–17, page 626.International operation of ships or aircraft; foreign cor-poration. This ruling assists a foreign corporation engagedin the international operation of ships or aircraft, and its share-holders, in determining whether the foreign corporation is orga-nized in a country that grants an “equivalent exemption” fromtax for purposes of section 883(a) and (c) of the Code. The rul-ing also assists a nonresident alien individual engaged in the in-ternational operation of ships or aircraft in determining whethera country grants an equivalent exemption for purposes of sec-tion 872(b). The ruling does not, however, provide substantiveguidance under section 883. Rev. Ruls. 89–42, 97–31, and2001–48 modified and superseded.

Notice 2008–33, page 642.This notice provides procedures for manufacturers to followto certify both that a particular make, model, and model yearof fuel cell motor vehicle meets the requirements of section30B(a)(1) and (b) of the Code, and the amount of the creditallowable with respect to the vehicle.

Notice 2008–34, page 645.This notice identifies a transaction in which a tax indifferentparty contributes one or more distressed assets with a highbasis and low fair market value to a trust or series of trustsand sub-trusts, and a U.S. taxpayer acquires an interest in thetrust (and/or series of trusts and/or sub-trusts) for the purposeof shifting a built-in loss from the tax indifferent party to the U.S.taxpayer that has not incurred the economic loss.

Notice 2008–35, page 647.This notice supersedes Notice 2006–27, 2006–1 C.B. 626, bysubstantially republishing the guidance contained in that publi-

cation while clarifying the meaning of the terms equivalent rat-ing network, equivalent calculation procedure, and eligible con-tractor. The notice also clarifies the process for removing soft-ware from the list of approved software and provides for the ex-tension of the tax credit through December 31, 2008. Notice2006–27 clarified and superseded. Announcement 2006–88clarified and superseded.

Notice 2008–36, page 650.This notice supersedes Notice 2006–28, 2006–1 C.B. 628, bysubstantially republishing the guidance contained in that publi-cation while clarifying the meaning of the terms equivalent rat-ing network, equivalent calculation procedure, and eligible con-tractor. The notice also clarifies the process for removing soft-ware from the list of approved software and provides for the ex-tension of the tax credit through December 31, 2008. Notice2006–28 clarified and superseded. Announcement 2006–88clarified and superseded.

Rev. Proc. 2008–21, page 657.This procedure provides that the Service will not challengethe accuracy of 2007 returns filed in compliance with Notice2008–28, 2008–10 I.R.B. 546, by eligible individuals who en-ter $1.00 in adjusted gross income on their 2007 return for thesole purpose of effectuating the electronic filing of their 2007tax return.

Rev. Proc. 2008–22, page 658.Automobile owners and lessees. This procedure providesowners and lessees of passenger automobiles (including trucksand vans) with tables detailing the limitations on depreciationdeductions for passenger automobiles first placed in serviceduring calendar year 2008 and the amounts to be included inincome for passenger automobiles first leased during calendaryear 2008.

(Continued on the next page)

Finding Lists begin on page ii.

Rev. Proc. 2008–23, page 664.This procedure provides an alternative dollar-value last-in, first-out (LIFO) pooling method, the Vehicle-Pool Method, for certainresellers of cars and light-duty trucks and provides proceduresfor obtaining automatic consent to change to that method. Theprocedure also provides the permissible method of pooling forcrossover vehicles under the Alternative LIFO Method and theUsed Vehicle Alternative LIFO Method for those resellers thatdo not choose to use the Vehicle-Pool Method. Rev. Procs.97–36 and 2001–23 modified.

EMPLOYEE PLANS

Notice 2008–29, page 637.Alternative mortality tables; disabled individuals; de-fined benefit plans. This notice provides which mortalitytables are permitted to be used to determine present valueswith respect to individuals who are entitled to benefits under aqualified defined benefit pension plan on account of disability.

Notice 2008–30, page 638.Distributions; various issues; Pension Protection Act of2006 (PPA ’06). This notice provides guidance in the formof questions and answers with respect to certain provisionscontained in PPA ’06 that are effective in 2008 and are primarilyrelated to distributions described in sections 302, 824, and1004 of PPA ’06.

Notice 2008–37, page 654.Weighted average interest rate update; corporate bondindices; 30-year Treasury securities; segment rates.This notice contains updates for the corporate bond weightedaverage interest rate for plan years beginning in March 2008;the 24-month average segment rates; the funding transitionalsegment rates applicable for March 2008; and the minimumpresent value transitional rates for February 2008.

EXCISE TAX

Rev. Rul. 2008–15, page 633.Insurance premiums; excise tax consequences. This rul-ing describes the insurance excise tax consequences (undersection 4371 of the Code) of insurance premiums paid by oneforeign insurer (foreign insurer) to another (foreign reinsurer). Inparticular, the ruling addresses the excise tax consequencesof such payments where the foreign insurer is eligible for awaiver of the excise tax by income tax treaty but the foreignreinsurer is not. There are two types of insurance excise taxwaivers provided by treaty. The ruling addresses both types ofwaivers. Rev. Rul. 58–612 clarified and amplified.

Announcement 2008–18, page 667.This announcement sets forth a voluntary compliance initiativethat encourages any foreign person who has failed to pay ex-cise taxes due under section 4371 of the Code, or failed todisclose that it has claimed a waiver from the taxes pursuantto an income tax treaty, to become compliant with its obliga-tions. In general, if a taxpayer participates in this initiative inaccordance with the terms laid out in this announcement, theIRS will not conduct examinations covering insurance excisetax liabilities arising under the four situations set forth in Rev.Rul. 2008–15 (this Bulletin), or any similar fact pattern, to theextent that premiums are paid or received by the participatingtaxpayer during any quarterly tax period prior to October 1,2008.

TAX CONVENTIONS

Rev. Rul. 2008–15, page 633.Insurance premiums; excise tax consequences. This rul-ing describes the insurance excise tax consequences (undersection 4371 of the Code) of insurance premiums paid by oneforeign insurer (foreign insurer) to another (foreign reinsurer). Inparticular, the ruling addresses the excise tax consequencesof such payments where the foreign insurer is eligible for awaiver of the excise tax by income tax treaty but the foreignreinsurer is not. There are two types of insurance excise taxwaivers provided by treaty. The ruling addresses both types ofwaivers. Rev. Rul. 58–612 clarified and amplified.

Rev. Rul. 2008–17, page 626.International operation of ships or aircraft; foreign cor-poration. This ruling assists a foreign corporation engagedin the international operation of ships or aircraft, and its share-holders, in determining whether the foreign corporation is orga-nized in a country that grants an “equivalent exemption” fromtax for purposes of section 883(a) and (c) of the Code. The rul-ing also assists a nonresident alien individual engaged in the in-ternational operation of ships or aircraft in determining whethera country grants an equivalent exemption for purposes of sec-tion 872(b). The ruling does not, however, provide substantiveguidance under section 883. Rev. Ruls. 89–42, 97–31, and2001–48 modified and superseded.

(Continued on the next page)

March 24, 2008 2008–12 I.R.B.

Announcement 2008–18, page 667.This announcement sets forth a voluntary compliance initiativethat encourages any foreign person who has failed to pay ex-cise taxes due under section 4371 of the Code, or failed todisclose that it has claimed a waiver from the taxes pursuantto an income tax treaty, to become compliant with its obliga-tions. In general, if a taxpayer participates in this initiative inaccordance with the terms laid out in this announcement, theIRS will not conduct examinations covering insurance excisetax liabilities arising under the four situations set forth in Rev.Rul. 2008–15 (this Bulletin), or any similar fact pattern, to theextent that premiums are paid or received by the participatingtaxpayer during any quarterly tax period prior to October 1,2008.

ADMINISTRATIVE

Notice 2008–34, page 645.This notice identifies a transaction in which a tax indifferentparty contributes one or more distressed assets with a highbasis and low fair market value to a trust or series of trustsand sub-trusts, and a U.S. taxpayer acquires an interest in thetrust (and/or series of trusts and/or sub-trusts) for the purposeof shifting a built-in loss from the tax indifferent party to the U.S.taxpayer that has not incurred the economic loss.

2008–12 I.R.B. March 24, 2008

The IRS MissionProvide America’s taxpayers top quality service by helping themunderstand and meet their tax responsibilities and by applying

the tax law with integrity and fairness to all.

IntroductionThe Internal Revenue Bulletin is the authoritative instrument ofthe Commissioner of Internal Revenue for announcing officialrulings and procedures of the Internal Revenue Service and forpublishing Treasury Decisions, Executive Orders, Tax Conven-tions, legislation, court decisions, and other items of generalinterest. It is published weekly and may be obtained from theSuperintendent of Documents on a subscription basis. Bulletincontents are compiled semiannually into Cumulative Bulletins,which are sold on a single-copy basis.

It is the policy of the Service to publish in the Bulletin all sub-stantive rulings necessary to promote a uniform application ofthe tax laws, including all rulings that supersede, revoke, mod-ify, or amend any of those previously published in the Bulletin.All published rulings apply retroactively unless otherwise indi-cated. Procedures relating solely to matters of internal man-agement are not published; however, statements of internalpractices and procedures that affect the rights and duties oftaxpayers are published.

Revenue rulings represent the conclusions of the Service on theapplication of the law to the pivotal facts stated in the revenueruling. In those based on positions taken in rulings to taxpayersor technical advice to Service field offices, identifying detailsand information of a confidential nature are deleted to preventunwarranted invasions of privacy and to comply with statutoryrequirements.

Rulings and procedures reported in the Bulletin do not have theforce and effect of Treasury Department Regulations, but theymay be used as precedents. Unpublished rulings will not berelied on, used, or cited as precedents by Service personnel inthe disposition of other cases. In applying published rulings andprocedures, the effect of subsequent legislation, regulations,

court decisions, rulings, and procedures must be considered,and Service personnel and others concerned are cautionedagainst reaching the same conclusions in other cases unlessthe facts and circumstances are substantially the same.

The Bulletin is divided into four parts as follows:

Part I.—1986 Code.This part includes rulings and decisions based on provisions ofthe Internal Revenue Code of 1986.

Part II.—Treaties and Tax Legislation.This part is divided into two subparts as follows: Subpart A,Tax Conventions and Other Related Items, and Subpart B, Leg-islation and Related Committee Reports.

Part III.—Administrative, Procedural, and Miscellaneous.To the extent practicable, pertinent cross references to thesesubjects are contained in the other Parts and Subparts. Alsoincluded in this part are Bank Secrecy Act Administrative Rul-ings. Bank Secrecy Act Administrative Rulings are issued bythe Department of the Treasury’s Office of the Assistant Secre-tary (Enforcement).

Part IV.—Items of General Interest.This part includes notices of proposed rulemakings, disbar-ment and suspension lists, and announcements.

The last Bulletin for each month includes a cumulative indexfor the matters published during the preceding months. Thesemonthly indexes are cumulated on a semiannual basis, and arepublished in the last Bulletin of each semiannual period.

The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.

For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402.

March 24, 2008 2008–12 I.R.B.

Part I. Rulings and Decisions Under the Internal Revenue Codeof 1986Section 872.—GrossIncome

A revenue ruling is provided to assist a foreigncorporation engaged in the international operation ofships or aircraft, and its shareholders, in determin-ing whether the foreign corporation is organized ina country that grants an “equivalent exemption” fromtax for purposes of section 883(a) and (c) of the In-ternal Revenue Code (Code). This revenue rulingis also intended to assist a nonresident alien individ-ual engaged in the international operation of ships oraircraft in determining whether a country grants anequivalent exemption from tax for purposes of sec-tion 872(b) of the Code. See Rev. Rul. 2008-17,page 626.

Section 883.—ExclusionsFrom Gross Income26 CFR 1.883: Exclusion of income from the interna-tional operation of ships or aircraft.(Also Section 872, 894.)

International operation of ships oraircraft; foreign corporation. This rul-ing assists a foreign corporation engagedin the international operation of ships oraircraft, and its shareholders, in determin-ing whether the foreign corporation is or-ganized in a country that grants an “equiv-alent exemption” from tax for purposes ofsection 883(a) and (c) of the Code. Theruling also assists a nonresident alien in-dividual engaged in the international op-eration of ships or aircraft in determiningwhether a country grants an equivalent ex-emption for purposes of section 872(b).The ruling does not, however, provide sub-stantive guidance under section 883. Rev.Ruls. 89–42, 97–31, and 2001–48 modi-fied and superseded.

Rev. Rul. 2008–17

Purpose

The purpose of this revenue ruling isto assist a foreign corporation engaged inthe international operation of ships or air-craft, and its shareholders, in determiningwhether the foreign corporation is orga-nized in a country that grants an “equiv-alent exemption” from tax for purposes ofsection 883(a) and (c) of the Internal Rev-enue Code (Code). This revenue ruling isalso intended to assist a nonresident alien

individual engaged in the international op-eration of ships or aircraft in determiningwhether a country grants an equivalent ex-emption from tax for purposes of section872(b) of the Code. This revenue rulingprovides lists of countries that may pro-vide various forms of equivalent exemp-tions. This revenue ruling does not, how-ever, provide substantive guidance undersection 883 of the Code. For detailed guid-ance, see Treas. Reg. § 1.883–0 through§ 1.883–5 (T.D. 9087, 2003–2 C.B. 781,as amended by T.D. 9218, 2005–2 C.B.503), and Treas. Reg. § 1.883–0T through§ 1.883–5T (T.D. 9332, 2007–32 I.R.B.300).

Background

Section 883(a) of the Code generallyprovides that gross income derived bya foreign corporation from the interna-tional operation of ships or aircraft shallnot be included in the gross income ofsuch foreign corporation, and shall be ex-empt from U.S. taxation, if the country inwhich the corporation is organized grantsan equivalent exemption to corporationsorganized in the United States (U.S. cor-porations). Section 883(c)(1) providesthat the exemption provided by section883(a) is not available if 50 percent ormore of the value of the stock of the for-eign corporation is owned by individualswho are not residents of a country thatgrants an equivalent exemption to U.S.corporations. Thus, a foreign corporationseeking to avail itself of the exemptionfrom tax under section 883 must determinewhether it is organized in a country thatprovides an equivalent exemption to U.S.corporations and whether its shareholdersare organized in, or residents of, a countrythat provides an equivalent exemption toU.S. corporations. Treasury regulation§ 1.883–1(c)(3) also requires a foreigncorporation claiming an exemption fromtax to provide the applicable authority foran equivalent exemption with its Form1120–F (U.S. Income Tax Return of a For-eign Corporation).

Treasury regulation § 1.883–1(h)(1)provides that an equivalent exemptionmay exist if a foreign country generally

imposes no tax on income or specificallyprovides an exemption under domesticlaw for income derived from the inter-national operation of ships or aircraft.Alternatively, a foreign country may ex-change a diplomatic note, or enter intoan agreement, with the United States thatprovides for an equivalent exemption forpurposes of section 883. Treas. Reg.§ 1.883–1T(h)(1) broadens the definitionof equivalent exemption to include anexemption provided by income tax con-vention, provided the foreign corporationmeets certain additional conditions setforth in § 1.883–1T(h)(3).

Table I

Part A of Table I of this revenue rulingprovides a list of countries that grant anequivalent exemption as evidenced by adiplomatic note exchanged with the UnitedStates.

Part B of Table I provides a list of coun-tries that grant an equivalent exemption toU.S. corporations by statute or decree, orby not imposing tax on income from theinternational operation of ships or aircraft.The Internal Revenue Service (IRS) gen-erally has made the determinations basedupon information submitted by the foreigncountry regarding its domestic law in ef-fect at the time of the submission. The dateof the IRS’s review of the foreign country’slaw is reflected in the first column of PartB of Table I. The list of countries includedin Part B of Table I is not an exhaustive listof the countries which provide an equiva-lent exemption under domestic law. Othercountries that have not submitted the infor-mation necessary for the IRS to make a de-termination also may grant an equivalentexemption.

Because Part B of Table I does not re-flect any changes to a country’s domesticlaw since the IRS’s review, a foreign cor-poration and its shareholders should inde-pendently verify the accuracy of the infor-mation in Part B of Table I as it relates tothe relevant taxable year.

Consistent with past practice, the IRSwill entertain a request from a foreign gov-ernment to determine whether the domes-tic law of the foreign country provides an

2008–12 I.R.B. 626 March 24, 2008

equivalent exemption for one or more cate-gories of income that may be exempt fromU.S. taxation under section 883. Accord-ingly, taxpayers may ask the relevant for-eign government to contact the IRS for thispurpose. The letter from the foreign gov-ernment official should be addressed to theAssociate Chief Counsel (International),Internal Revenue Service, 1111 Constitu-tion Avenue, NW, Washington, DC 20224,Attn: CC:INTL:Br1. The letter shouldstate the name, citation, and effective dateof the statute or decree, and generally de-scribe the application of the country’s do-mestic law to income derived by U.S. per-sons from the international operation ofships or aircraft and from calling on portsor airports in that country. For example,the letter should discuss whether the lawprovides an exemption for each categoryof income described in § 1.883–1(h)(2)(i)through (viii). A copy of the relevantstatute or decree as published in an offi-cial government publication and a certifiedEnglish translation of the document, if itwas not published in English, should be at-tached to the letter.

Table II

Table II of this revenue ruling providesa list of countries that have entered intoincome tax conventions with the UnitedStates that include a shipping and air trans-port article or a gains article. Prior tothe issuance of § 1.883–1T(h)(3), a for-eign corporation organized in a countrythat only provided an exemption from taxthrough an income tax convention withthe United States was not considered orga-nized in a country that granted an equiv-alent exemption for purposes of section883. For taxable years of foreign cor-porations beginning on or after June 25,2007, § 1.883–1T(h)(3)(i) provides that ifa foreign corporation is organized in a for-eign country that only provides an exemp-tion from tax for profits from the oper-ation of ships or aircraft in internationaltransport or international traffic under theshipping and air transport or gains arti-cle of an income tax convention with theUnited States, then such foreign corpora-tion may treat the exemption from tax pro-vided by the income tax convention as anequivalent exemption for purposes of sec-tion 883, but only if: (1) the foreign cor-poration meets all the conditions for claim-

ing benefits with respect to such profits un-der the income tax convention, includingthe limitation on benefits article; and (2)the profits that are exempt from tax pur-suant to the income tax convention also fallwithin a category of income described in§ 1.883–1(h)(2)(i) through (viii).

A foreign corporation that relies onan income tax convention as providingan equivalent exemption with respect toa particular category of income under§ 1.883–1T(h)(1)(ii) must demonstrate notonly that it qualifies for benefits underthe income tax convention but also that itmeets the requirements of section 883. Forexample, a corporation that is considered aresident of a foreign country that grants anequivalent exemption because it is man-aged and controlled in that country will notqualify for an exemption from tax undersection 883(a) unless the corporation isalso organized in that country. Similarly, aforeign corporation that does not meet oneof the stock ownership tests described in§ 1.883–1(c)(2) may not claim an exemp-tion from tax under section 883, even if itqualifies for benefits under the limitationon benefits article of the relevant incometax convention.

Table II summarizes the bases forclaiming an exemption under each in-come tax convention, including whetherthe exemption under the shipping and airtransport article is based solely on resi-dence, or, as in the case of certain olderincome tax conventions, the exemptionhas an additional requirement of documen-tation or registration. Table II now alsoincludes limitation on benefits articles asa condition for claiming benefits. Table IIdoes not set forth other benefits relating toa shipping or an air transport business thatmay be provided under articles coveringbusiness profits, rentals and royalties, orother income because such benefits arenot relevant for purposes of section 883(a)or (c).

Table I and Table II are intended onlyas a summary, and the full text of any rel-evant diplomatic note, foreign law, or in-come tax convention (including any pro-tocol thereto, any agreement, any diplo-matic note accompanying the convention,or the technical explanation of the incometax convention) should be consulted. TheIRS and Treasury Department intend to up-date the tables periodically.

CHANGES TO REV. RUL. 2001–48

In Part A of Table I, Angola, the CapeVerde Islands, Ghana, and the Bailiwickof Jersey have been added to the list ofcountries that have exchanged diplomaticnotes with the United States.

In Part B of Table I, the British Vir-gin Islands, Croatia, Gibraltar, Kuwait(shipping only), Monaco, Qatar (shippingonly), and Uruguay have been added to thelist of countries whose domestic law hasbeen determined to provide an equivalentexemption.

In Table II, the following countries havebeen added to the list of countries that pro-vide an exemption under an income taxconvention: Bangladesh and Sri Lanka.The following countries have entered intonew income tax conventions or protocolswith the United States that contain newshipping and air transport articles that su-persede prior income tax conventions re-ported in Rev. Rul. 2001–48: Australia,Belgium, Japan, and the United Kingdom.

A subheading has been added under theheading Basis for Exemption to notify anyforeign person, whether it is the corpora-tion seeking an exemption from tax un-der section 883, or a shareholder of suchcorporation, that it may not treat an in-come tax convention as granting an equiv-alent exemption unless that person qual-ifies for benefits under the limitation onbenefits article, if any, in that income taxconvention. Footnote number 35 has alsobeen added to identify those countries thatprovide an equivalent exemption from taxonly through an income tax conventionwith the United States.

TO CLAIM AN EXEMPTION

Nonresident alien individuals claimingan exemption from U.S. taxation undersection 872(b) of the Code must file a re-turn on Form 1040NR (U.S. NonresidentAlien Income Tax Return), follow the ac-companying instructions, and claim the ex-emption. Foreign corporations claimingan exemption under section 883 must filea return on Form 1120F (U.S. Income TaxReturn of a Foreign Corporation), followthe accompanying instructions, and com-ply with the relevant reporting provisionsof Treas. Reg. § 1.883–1(c)(3).

March 24, 2008 627 2008–12 I.R.B.

EFFECT ON OTHER REVENUERULINGS

Rev. Rul. 89–42, Rev. Rul. 97–31,and Rev. Rul. 2001–48 are modified andsuperseded.

DRAFTING INFORMATION

The principal author of this revenue rul-ing is Patricia A. Bray of the Office of As-sociate Chief Counsel (International). Forfurther information regarding this revenue

ruling, contact Patricia A. Bray at (202)622–5871 (not a toll-free call).

TABLE I

Countries Granting Equivalent Exemptions ForIncome From The International Operation of

Ships and Aircraft

PART A — EXCHANGE OF NOTES1

TYPES OF SHIPPING AND AIRCRAFT INCOME EXEMPTED2

Countries AndTerritories

Cumulative BulletinOr InternalRevenue BulletinCitation

OperatingIncome

Full Rental(Time orVoyageCharter)

BareboatRental

IncidentalContainerRental

Cap3 Gains

Angola 2007–42 I.R.B. 801 X X X X X

Argentina 1988–1 C.B. 456 X X X X X

Bahamas 1988–1 C.B. 458 X X X X -

Bahrain 2000–2 C.B. 475 X X X X X

Belgium 1988–1 C.B. 459 X X - X -

Bolivia4 1988–1 C.B. 460 X X X X -

Cape Verde 2005–2 C.B. 855 X X X X X

Chile5 1991–1 C.B. 304 X X X3 X -

Colombia 1988–1 C.B. 461 X X X X -

Cyprus 1989–2 C.B. 332 X X X X -

Denmark 1988–1 C.B. 462 X X X X -

El Salvador5 1988–1 C.B. 463 X X X X X

Ethiopia 1999–1 C.B. 1134 X X X X X

Fiji 1996–2 C.B. 202 X X X X X

Finland 1989–2 C.B. 334 X X X X -

Ghana 2002–1 C.B. 725 X X X X X

Greece 1988–2 C.B. 366 X X X X -

Hong Kong6/7 1995–1 C.B. 228 X X X X X

India 1990–2 C.B. 316 X X X3 X X

Isle of Man6 1990–2 C.B. 317 X X X X X

Japan 1990–2 C.B. 318 X X X X -

Jersey 2007–10 I.R.B. 665 X X X X X

Jordan 1996–2 C.B. 202 X X X X -

Liberia 1988–1 C.B. 463 X X X X X

Luxembourg 1996–2 C.B. 203 X X X X -

Malaysia 1990–2 C.B. 319 X X X3 X X

Malta 1997–1 C.B. 314 X X X X X

2008–12 I.R.B. 628 March 24, 2008

TABLE I—Continued


Ships and Aircraft

PART A — EXCHANGE OF NOTES1


Countries AndTerritories

Cumulative BulletinOr InternalRevenue BulletinCitation

OperatingIncome


BareboatRental


Cap3 Gains

MarshallIslands

1990–2 C.B. 321 X X X X X

Norway 1991–1 C.B. 304 X X X X X

Pakistan6 1991–1 C.B. 305 X8 - - - -

Panama 1988–2 C.B. 366 X X X X -

Peru6 1989–2 C.B. 335 X X X3 X -

St. Vincent &Grenadines

1989–2 C.B. 336 X X X X -

Saudi Arabia9 2000–1 C.B. 1126 X X X X X

Singapore 1990–2 C.B. 323 X X X X X

Sweden 1988–1 C.B. 466 X X X3 X -

Taiwan 1989–2 C.B. 337 X X X X -

United ArabEmirates

1998–2 C.B. 528 X X X X X

Venezuela 1988–1 C.B. 467 X X X3 X X

PART B — DOMESTIC LAW


CountriesAndTerritories

DateForeign LawReviewed

OperatingIncome


BareboatRental


Cap3 Gains

Antigua & Barbuda6 NOV 1991 X X X X X

Aruba JUNE 1999 X X X X -

Barbados OCT 1989 X X X X X

Bermuda NOV 1988 X X X X X

Brazil10 DEC 1988 X X X3 X -

British Virgin Islands MAR 2003 X X - - -

Bulgaria FEB 1989 X X X X X

Cayman Islands11 JAN 1987 X X X X X

Chile6 OCT 1988 X X X X X

Croatia FEB 2007 X X X X X

Ecuador6/12 DEC 1989 X X X3 X X

Gibraltar JULY 2006 X X X X X

Israel FEB 1991 X X X X X

March 24, 2008 629 2008–12 I.R.B.

TABLE I—Continued


Ships and Aircraft

PART B — DOMESTIC LAW—Continued



DateForeign LawReviewed

OperatingIncome


BareboatRental


Cap3 Gains

Kuwait6 APRIL 2007 X X X X -

Monaco JAN 2005 X X X X X

Netherlands OCT 1988 X X X3 X -

Netherlands Antilles MAY 1988 X X X X X

Peru5 SEPT 1995 X X X X X

Ships JUNE 1989 X X X - -Portugal10

Aircraft FEB 1989 X X X - -

Ships6 JAN 1993 X8 X - - -Qatar

Aircraft5 AUG 1994 X8 - - - -

Spain13 DEC 1988 X X - X -

Surinam NOV 1999 X X X X X

Turkey14 JAN 1987 X - - X -

Turks & Caicos11 FEB 1990 X X X X X

Uruguay JAN 2007 X8 - - - -

U.S. Virgin Islands OCT 1988 X X X X X

Vanuatu MAY 1987 X X X X X

TABLE II

Countries Granting Exemptions from Tax by Income Tax Convention15

BASIS FOR EXEMPTION TYPES OF SHIPPING AND AIRCRAFT INCOMEEXEMPTED2


ResidenceBased NoFlag

Residence& FlagReciprocal

LOB29

ArticleOperatingIncome

FullRental(Time orVoyageCharter)

Bare-BoatRental


CapGains

Australia19/35 X - X X X16 X3 X X

Austria35 X - X X X20 X20 X X

Bangladesh19/35 X - X X X20 X20 X X

Barbados X - X X X20 X20 X X

Belgium19 X - X X X X20 X X

Canada35 X - X X X X X X

China22/35 (People’sRepublic)

X - X X X20 X20 X X

2008–12 I.R.B. 630 March 24, 2008

TABLE II—Continued






LOB29



Bare-BoatRental


CapGains

Cyprus X - X X X20 X20 X X

Czech Republic35 X - X X X X3 X X

Denmark X - X X X X20 X X

Egypt X - - X X3 X3 X -

Estonia35 X - X X X X3 X X

Finland X - X X X3 X3 X X

France35 X - X X X X20 X X

Germany24/35 X - X X X - X X

Greece - X - X8 - - - -

Hungary35 X - - X X3 X3 X X

Iceland35 - X25 - X X3 X3 X X

India X - X X X3 X3 X X

Indonesia35 X - X X X X27 X X

Ireland35 X - X X X X20 X X

Israel X - X X X3 X3 X X

Italy28/29/35 - X25 X X X30 X3 X X

Jamaica35 X - X X X20 X20 X X

Japan28/19 X - X X X3 X X X

Kazakhstan35 X - X X X X20 X X

Korea35 X - - X X32 - X -

Latvia35 X - X X X X17 X X

Lithuania35 X - X X X X17 X X

Luxembourg X - X X X X20 X X

Mexico35 X - X X X X23 X X

Morocco35 - X21 - X8 - - - X

Netherlands X - X X X3 X3 - X

New Zealand35 X - X X X X3 X X

Norway28 X - - X X32 X3 X X

Pakistan5 - X - X8 - - - -

Philippines6/35 X - - - - - - X

Poland35 - X25 - X X3 X3 X X

Portugal35 X - X X X X3 - X

Romania35 - X - X X3 X3 X X

March 24, 2008 631 2008–12 I.R.B.

TABLE II—Continued






LOB29



Bare-BoatRental


CapGains

Russian Federation35 X - X X X X20 X X

Slovak Republic35 X - X X X X3 X X

Slovenia35 X - X X X X20 X X

South Africa35 X - X X X X20 X X

Spain X - X X X X3 X X

Sri Lanka5/19/31/35 X - X X X20 X20 - -

Sweden X - X X X X3 X X

Switzerland35 X - X X X33 X3 - X

Thailand35 X5 - X X X X3 X X

X6 - X - - - - X

Trinidad & Tobago35 - X25 - X X3 X3 - X

Tunisia35 X - X X X20 X20 X X

Turkey X - X X X X3 X X

Ukraine35 X - X X X X20 X X

USSR/NIS34/35 - X - X8 - - - X

U.K.19/35 X - X X X X3 X X

Venezuela35 X - X X X X20 X X

FOOTNOTES TO TABLES1

Notes signed prior to the Technical and Miscellaneous Revenue Act of 1988 are interpreted in accordance with the technical corrections enacted by that Act.2

Under the heading “Types of Shipping and Aircraft Income Exempted” unless otherwise footnoted, an “X” indicates full exemption whether or not there is apermanent establishment.

3The tax exemption is available only if the income is incidental to operating income.

4The note was ratified by the Bolivian Congress and signed by the Bolivian President. The note and exemption officially became effective upon publication inthe official Gazette on March 31, 1999, for income earned after that date.

5This exemption applies to aircraft only.

6This exemption applies to shipping only.

7This diplomatic note applies to Hong Kong before July 1, 1997, and pursuant to Notice 97–40, 1997–2 C.B. 287, to the Hong Kong Special AdministrativeRegion of the People’s Republic of China on or after July 1, 1997. The note does not apply with respect to the People’s Republic of China, which will continueto be treated as a separate country for purposes of the Internal Revenue Code.

8Operating income is not defined.

9The note is effective for all taxable years beginning on or after January 1, 1999, and for all prior open taxable years.

10Only corporations are exempt under the Brazilian and Portuguese statutes.

11The country generally imposes no income tax.

12This exemption is generally effective for all open years beginning on or after January 1, 1987.

13The Spanish statute exempts only corporations.

14See generally Rev. Rul. 87–18, 1987–1 C.B. 178 (explaining the application of Turkey’s domestic-law exemption).

15Table II is relevant for determining whether a shareholder of a foreign corporation is a resident of a country that grants an equivalent exemption by means of anincome tax convention with the United States. Table II is also relevant for determining whether a foreign corporation itself is eligible to claim an exemptionunder section 883(a) when it is organized in a country that only provides an exemption by means of an income tax convention.

16Lessor must either regularly lease ships or aircraft on a full basis or operate them in international traffic.

2008–12 I.R.B. 632 March 24, 2008

17This exemption applies if the ships or aircraft are operated in international traffic by the lessee, and the rental income is incidental to the operation of ships oraircraft in international traffic by the lessor.

18Except to the extent depreciation has been allowed in the other country.

19The following countries have entered into new income tax conventions or protocols with the United States that contain new Shipping and Air Transport articlesthat supersede prior income tax conventions reported in Rev. Rul. 2001–48:

Australia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . January 1, 2004Bangladesh . . . . . . . . . . . . . . . . . . . . . . . . . . . January 1, 2007Belgium. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . January 1, 2008Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . January 1, 2005Sri Lanka . . . . . . . . . . . . . . . . . . . . . . . . . . . . . January 1, 2004United Kingdom . . . . . . . . . . . . . . . . . . . . . . . January 1, 2004

20This exemption applies if the ships or aircraft are operated in international traffic by the lessee, or the rental income is incidental to the operation of ships oraircraft in international traffic by the lessor.

21In the case of aircraft only, the registration may be in the country of residence or in any country with a treaty providing an equivalent exemption betweensuch country and the country of residence.

22Pursuant to Notice 97–40, 1997–2 C.B. 287, the treaty between the United States and the People’s Republic of China (China) will continue to apply only toChina and will not apply to the Hong Kong Special Administrative Region of the People’s Republic of China. The Shipping and Aircraft Agreement betweenChina and the United States was ratified on September 6, 1983. The Shipping and Aircraft Agreement is separate from the income tax treaty with China.

23The exemption applies except where the containers are used solely between places within the other Contracting State.

24This treaty is effective for the eastern States of Germany (the former East Germany) from January 1, 1991.

25Documentation or registration required for ships or aircraft of United States residents only.

26This treaty exempts gains derived by an enterprise of a Contracting State if the ships or aircraft or containers are owned and operated by the enterpriseand the income from them is taxable only in that State.

27Income from the bareboat rental of aircraft used in international traffic is exempt. Income from the bareboat rental of ships also is exempt if the ship is operatedin international traffic and if the lessee is not a resident of, or does not have a permanent establishment in, the other Contracting State.

28See also the diplomatic notes or protocol accompanying this treaty.

29Each country identified in this column has entered into an income tax convention with the United States that contains a comprehensive limitation onbenefits article. Accordingly, if a foreign corporation or shareholder of a foreign corporation intends to rely on an equivalent exemption provided throughsuch an income tax convention with the United States, that person must be a resident of that country for treaty purposes and satisfy the limitation onbenefits article in that convention.

30This exemption applies if the ship or aircraft is operated in international traffic or if the rental income is incidental to income from such international operation.

31In connection with the revised U.S. protocol with Sri Lanka, an exchange of notes signed September 20, 2002, provides, “[w]ith respect to Article 8 (Shippingand Air Transport), it is understood that Sri Lanka shall exempt from tax the profits of an enterprise of the United States from sources within Sri Lanka from theoperation in international traffic of ships for as long as there remains in force Article 8 of the Convention between the Government of the Democratic SocialistRepublic of Sri Lanka and the Government of the United Kingdom of Great Britain and Northern Ireland for the Avoidance of Double Taxation and thePrevention of Fiscal Evasion with Respect to Taxes on Income and Capital Gains, signed at London on June 21, 1979; Article 8 of the Convention Between theGovernment of the Polish People’s Republic and the Government of the Democratic Socialist Republic of Sri Lanka for the Avoidance of Double Taxation andthe Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital, signed at Colombo on April 25, 1980; or any provision granting the sametreatment as accorded under aforesaid provisions to a resident of a third state.”

32As a result of correspondence, it was clarified that income from the international operation of ships or aircraft includes this category of income.

33This exemption applies if the ships or aircraft are used by the lessee in international traffic.

34The U.S. - U.S.S.R. income tax treaty signed June 20, 1973, continues to apply to the New Independent States (NIS) of Armenia, Azerbaijan, Belarus, Georgia,Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, and Uzbekistan. See Treasury News NB–1763.

35This country only provides an exemption from tax through an income tax convention with the United States. A corporation organized in this country andclaiming an exemption under section 883(a) must satisfy the additional requirements set forth in §1.883–1T(h)(3).

Section 894.—IncomeAffected by Treaty

A revenue ruling is provided to assist a foreigncorporation engaged in the international operation ofships or aircraft, and its shareholders, in determin-ing whether the foreign corporation is organized ina country that grants an “equivalent exemption” fromtax for purposes of section 883(a) and (c) of the In-ternal Revenue Code (Code). This revenue rulingis also intended to assist a nonresident alien individ-ual engaged in the international operation of ships oraircraft in determining whether a country grants anequivalent exemption from tax for purposes of sec-tion 872(b) of the Code. See Rev. Rul. 2008-17,page 626.

Section 4371.—Impositionof Tax

An announcement describes a voluntary compli-ance initiative by the Internal Revenue Service (IRS)regarding the foreign insurance excise tax. See An-nouncement 2008-18, page 667.

(Also: 4372, 4373, and 4374.)

Insurance premiums; excise tax con-sequences. This ruling describes the insur-ance excise tax consequences (under sec-tion 4371 of the Code) of insurance premi-ums paid by one foreign insurer (foreigninsurer) to another (foreign reinsurer). Inparticular, the ruling addresses the excise

tax consequences of such payments wherethe foreign insurer is eligible for a waiverof the excise tax by income tax treaty butthe foreign reinsurer is not. There are twotypes of insurance excise tax waivers pro-vided by treaty. The ruling addresses bothtypes of waivers. Rev. Rul. 58–612 clari-fied and amplified.

Rev. Rul. 2008–15

ISSUES

1) Whether the reinsurance excise taximposed by section 4371(3) of the InternalRevenue Code (Code) on policies of rein-surance covering contracts taxable under

March 24, 2008 633 2008–12 I.R.B.

paragraph (1), (2) or (3) of section 4371 ap-plies to reinsurance premiums paid by oneforeign insurer or reinsurer to another.

2) Whether the insurance excise taxesimposed by section 4371 apply to the ex-tent that a foreign insurer or reinsurer thatwould otherwise be entitled under an in-come tax treaty to an exemption from theexcise taxes imposed by paragraphs (1),(2) or (3) of section 4371 reinsures therisks covered by such contracts with a for-eign reinsurer that is not entitled to an ex-emption from such excise taxes under anincome tax treaty (a nonqualified foreignreinsurer).

FACTS

Situation 1

Foreign Insurer, a foreign corporationincorporated in Country X, issues policiesof casualty insurance to U.S. Corporation,a domestic corporation, with respect tohazards, risks, losses, or liabilities whollyor partly within the United States. For-eign Insurer is not engaged in a trade orbusiness in the United States. Country Xdoes not have an income tax treaty with theUnited States.

Foreign Insurer enters into a reinsur-ance agreement with Foreign Reinsurer, aforeign corporation incorporated in Coun-try Y, whereby Foreign Reinsurer agreesto indemnify Foreign Insurer against all orpart of the loss that Foreign Insurer maysustain under the policies it has issued toU.S. Corporation. Foreign Reinsurer is notengaged in a trade or business in the UnitedStates. Country Y has an income tax treatywith the United States that does not exemptinsurance premiums from the excise taxesimposed by section 4371.

Situation 2

Foreign Reinsurer A, a foreign corpo-ration incorporated in Country W, issuespolicies of reinsurance to Domestic In-surer, a U.S. corporation, that cover casu-alty insurance contracts issued to or for, orin the name of, an insured as defined insection 4372(d). Foreign Reinsurer A en-ters into a reinsurance agreement with For-eign Reinsurer B, incorporated in CountryY, whereby Foreign Reinsurer B agrees toindemnify Foreign Reinsurer A against allor part of the loss that Foreign Reinsurer

A may sustain under the policies it has is-sued to Domestic Insurer. Country W andCountry Y have income tax treaties withthe United States that do not exempt insur-ance premiums from the excise taxes im-posed by section 4371.

Situation 3

The facts are the same as in Situation 1,except that there is an income tax treaty inforce between the United States and Coun-try X (the “U.S.-X Treaty”). Foreign In-surer is a resident of Country X for pur-poses of the U.S.-X Treaty and satisfiesthe requirements of the limitation on ben-efits article in that treaty. Article 2 of theU.S.-X Treaty provides, in pertinent part:

The existing taxes to which this Con-vention shall apply are:

In the case of the United States:* * *

the Federal excise taxes imposed oninsurance premiums paid to foreign in-surers...

The Convention shall, however, ap-ply to the Federal excise taxes imposedon insurance premiums paid to foreigninsurers only to the extent that the riskscovered by such premiums are not rein-sured with a person not entitled to thebenefits of this or any other conventionwhich provides exemption from thesetaxes....* * *

Situation 4

The facts are the same as in Situation 1,except that Foreign Insurer is a resident ofCountry Z and there is an income tax treatyin force between the United States andCountry Z (the “U.S.-Z Treaty”) that con-tains a comprehensive limitation on ben-efits article. Foreign Insurer satisfies therequirements of the limitation on benefitsarticle in that treaty. Article 2 of the U.S.-ZTreaty provides, in pertinent part:

The existing taxes to which this Con-vention shall apply are:

In the case of the United States:* * *

the Federal excise taxes imposed oninsurance policies issued by foreign in-surers...

The Business Profits article of theCountry Z treaty provides in pertinentpart:

* * *The United States excise tax on in-

surance policies issued by foreign in-surers shall not be imposed on insur-ance or reinsurance policies, the premi-ums on which are the receipts of a busi-ness of insurance carried on by an en-terprise of Country Z. However, if suchpolicies are entered into as part of aconduit arrangement, the United Statesmay impose excise tax on those poli-cies, unless the premiums in respect ofthose policies are, or are part of, the in-come of a permanent establishment thatthe enterprise of Country Z has in theUnited States.

The term “conduit arrangement” isdefined to mean a transaction or seriesof transactions:

which is structured in such a waythat a resident of a Contracting Stateentitled to the benefits of this Con-vention receives an item of incomearising in the other Contracting Statebut that resident pays, directly or in-directly, all or substantially all ofthat income (at any time or in anyform) to another person who is not aresident of either Contracting Stateand who, if it received that item ofincome direct from the other Con-tracting State, would not be entitledunder a convention for the avoid-ance of double taxation between thestate in which that other person isresident and the Contracting State inwhich the income arises, or other-wise, to benefits with respect to thatitem of income which are equivalentto, or more favourable than, thoseavailable under this Convention to aresident of a Contracting State; andwhich has as its main purpose, orone of its main purposes, obtainingsuch increased benefits as are avail-able under this Convention.

It is assumed for purposes of this rev-enue ruling that Foreign Insurer has not en-tered into such policies with U.S. Corpora-tion as part of a conduit arrangement.

LAW AND ANALYSIS

Section 4371 of the Code imposes anexcise tax on each policy of insurance, in-demnity bond, annuity contract, or policyof reinsurance issued by any foreign in-surer or reinsurer.

2008–12 I.R.B. 634 March 24, 2008

Section 4371(1) imposes such excisetax at the rate of 4 cents on each dollar,or fractional part thereof, of the premiumpaid on the policy of casualty insurance orthe indemnity bond, if issued to or for, or inthe name of, an insured as defined in sec-tion 4372(d).

Section 4371(2) imposes such excisetax at the rate of 1 cent on each dollar, orfractional part thereof, of the premium paidon the policy of life, sickness, or accidentinsurance, or annuity contract.

Section 4371(3) imposes such excisetax at the rate of 1 cent on each dollar, orfractional part thereof, of the premium paidon the policy of reinsurance covering anyof the contracts taxable under paragraph(1) or (2) of section 4371.

Section 4372(a) of the Code, for pur-poses of Section 4371, defines the term“foreign insurer or reinsurer” as an insureror reinsurer who is a nonresident alien in-dividual, or a foreign partnership, or a for-eign corporation.

Section 4372(d)(1) of the Code definesthe term “insured” to include a domesticcorporation or partnership, or an individ-ual resident of the United States, that isinsured against, or with respect to, haz-ards, risks, losses, or liabilities wholly orpartly within the United States. Section4372(d)(2) defines the term “insured” toinclude also a foreign corporation, foreignpartnership, or nonresident individual, en-gaged in a trade or business within theUnited States, that is insured against, orwith respect to, hazards, risks, losses, orliabilities within the United States.

Section 4372(f) of the Code defines theterm “policy of reinsurance”, for the pur-poses of section 4371(3), as any policy orother instrument by whatever name calledwhereby a contract of reinsurance is made,continued, or renewed against, or with re-spect to, any of the hazards, risks, losses,or liabilities covered by contracts taxableunder paragraph (1) or (2) of section 4371.

Section 4373(1) of the Code providesan exemption, whereby the tax imposed bysection 4371 shall not apply to any amountwhich is effectively connected with theconduct of a trade or business withinthe United States unless such amount isexempt from the application of section882(a) of the Code pursuant to a treatyobligation of the United States.

Section 4374 of the Code provides thatany tax imposed by section 4371 shall bepaid, on the basis of a return, by any personwho makes, signs, issues, or sells any ofthe documents and instruments subject tothe tax, or for whose use or benefit thesame are made, signed, issued or sold.

Revenue Ruling 58–612, 1958–2 C.B.850, concluded that a policy of reinsuranceissued by a foreign insurer covering anyof the hazards, risks, losses or liabilitiescovered by contracts taxable under section4371(1) and (2) of the Code is subject tothe tax imposed on reinsurance policies bysection 4371(3) of the Code, regardless ofwhether the primary insurer was a domes-tic or foreign insurer.

In United States v. NorthumberlandInsurance Co., Ltd., 521 F. Supp. 70(D. N.J. 1981), the court held that thepremiums ceded for a reinsurance policyissued by a foreign reinsurer are taxableif the underlying policy is issued to an“insured” as defined in section 4372(d),and there is no requirement that thereinsured qualify as an “insured” to besubject to the excise tax.

In American Bankers Insurance Com-pany of Florida v. United States, 265F.Supp 67 (S. D. Fla. 1967) (aff’d 388 F.2d304, 5th Cir. 1968), the court held that, forpurposes of determining whether the taximposed by section 4371(3) of the InternalRevenue Code of 1954 applied to contractsof reinsurance issued by foreign insurersto reinsure policies of insurance issued byplaintiffs who were domestic insurers, thephrase “taxable under paragraph (1) or (2)”in section 4371(3) does not require actualtaxation. The tax may be imposed if thepolicies are of the type “covered” or “de-scribed in” paragraphs (1) and (2), as suchcontracts are of the type capable of beingtaxed.

Treas. Reg. §46.4371–2(c), issued in1970, incorporating the decision in Amer-ican Bankers Insurance Company, statesthat “[s]ection 4371(3) imposes a tax uponeach policy of reinsurance...if issued- (1)[b]y a nonresident alien individual, a for-eign partnership, or a foreign corporation,as reinsurer ...; and (2) [t]o any personagainst, or with respect to, any of the haz-ards, risks, losses, or liabilities covered bycontracts described in section 4371(1) or(2).” (Emphasis added).

Situation 1

In Situation 1, the premiums paid byU.S. Corporation on the policies of casu-alty insurance issued by Foreign Insurerare subject to the four-percent excise taximposed by section 4371(1), because thepolicies were issued by Foreign Insurer,a foreign corporation, to U.S. Corpora-tion, an “insured” for purposes of section4372(d). In addition, premiums paid byForeign Insurer on the policies of reinsur-ance issued by Foreign Reinsurer with re-spect to the foregoing insurance policiesare subject to the one-percent excise taximposed by section 4371(3) because sec-tion 4371(3) imposes an excise tax on rein-surance policies issued by a foreign rein-surer with respect to risks covered by con-tracts described in section 4371(1).

Situation 2

In Situation 2, the reinsurance premi-ums paid by Domestic Insurer to ForeignReinsurer A covering casualty insurancecontracts issued by Domestic Insurer aresubject to the one-percent excise tax im-posed by section 4371(3), because thepolicies of reinsurance cover contractsdescribed in section 4371(1). The pre-miums paid by Foreign Reinsurer A toForeign Reinsurer B are also subject to theone-percent excise tax imposed by section4371(3) based on the same analysis.

Situation 3

In Situation 3, the premiums paid byU.S. Corporation on the policies of casu-alty insurance issued by Foreign Insurerwould generally be exempt from the sec-tion 4371(1) excise tax under the U.S.-XTreaty. However, the U.S.-X Treaty alsoprovides that such premiums are not ex-empt to the extent that the risks coveredby such premiums are reinsured with a for-eign reinsurer not entitled to the benefits ofa treaty that provides an exemption frominsurance excise taxes. Therefore, becausethe risks are reinsured with Foreign Rein-surer, who is not entitled to the benefits of atreaty that provides an exemption from in-surance excise taxes, the insurance premi-ums received by Foreign Insurer from U.S.Corporation are subject to the four-percentexcise tax as of the date the reinsurancepremiums are paid by Foreign Insurer toForeign Reinsurer. In addition, premiums

March 24, 2008 635 2008–12 I.R.B.

paid by Foreign Insurer to Foreign Rein-surer on the policies of reinsurance cover-ing contracts described in section 4371(1)are subject to the one-percent excise taximposed by section 4371(3), because For-eign Reinsurer is a resident of Country Y,which has an income tax treaty with theUnited States that does not exempt insur-ance premiums from the excise taxes im-posed by section 4371.

Situation 4

In Situation 4, the insurance premiumspaid by U.S. Corporation on the policiesof casualty insurance issued by Foreign In-surer are exempt from the section 4371(1)excise tax after application of the U.S.-ZTreaty because Foreign Insurer satisfiesthe requirements of the limitation on ben-efits provision of the U.S.-Z Treaty andthe policies were not entered into as partof a conduit arrangement. However, thepremiums paid by Foreign Insurer to For-eign Reinsurer on the policies of reinsur-ance issued by Foreign Reinsurer are sub-ject to the one-percent excise tax imposedby section 4371(3), because Foreign Rein-surer is a resident of Country Y, whichhas an income tax treaty with the UnitedStates that does not exempt insurance pre-miums from the excise taxes imposed bysection 4371. The fact that the original in-surance premiums paid by U.S. Corpora-tion to Foreign Insurer are exempt from taxafter application of the U.S.-Z Treaty doesnot preclude imposition of the excise taxunder section 4371(3) on premiums paidby Foreign Insurer to Foreign Reinsurer.Such reinsurance premiums are paid onpolicies of reinsurance covering contractsdescribed in and capable of being taxed un-der section 4371(1).

HOLDINGS

(1) The reinsurance excise tax imposedby section 4371(3) on policies of reinsur-ance covering contracts described in para-graph (1), (2) or (3) of section 4371 appliesto reinsurance premiums paid by one for-eign insurer or reinsurer to another foreignreinsurer, unless the second foreign rein-surer issuing the policies is itself entitled toan exemption from the excise tax under anincome tax treaty with the United States.

(2) Under the terms of the U.S.-XTreaty in Situation 3, the exemption fromthe excise taxes imposed by section 4371provided by the U.S.-X Treaty does notapply where a foreign insurer or rein-surer entitled to the benefits of the U.S.-XTreaty reinsures policies covering con-tracts described in paragraph (1), (2) or (3)of section 4371 with a foreign reinsurernot entitled to an exemption from excisetax under the U.S.-X Treaty or anotherincome tax treaty (the nonqualified for-eign reinsurer). Thus, the premiums onthe underlying policies of insurance orreinsurance paid to the foreign insurer be-come subject to the relevant excise taxesimposed by section 4371 upon the pay-ment of the subsequent premiums to thenonqualified foreign reinsurer. In addi-tion, the reinsurance premiums paid by theforeign insurer or reinsurer to the nonqual-ified foreign reinsurer are subject to theone-percent excise tax imposed by section4371(3) when paid.

(3) In contrast, under the terms of theU.S.-Z Treaty in Situation 4, if a foreigninsurer or reinsurer entitled to the bene-fits of the U.S.-Z Treaty reinsures policiescovering contracts described in paragraph(1), (2) or (3) of section 4371 with anotherforeign reinsurer not entitled to an exemp-tion from excise tax under an income taxtreaty, the premiums paid on the underly-ing policies will not become subject to theexcise taxes imposed by section 4371, un-less such policies were entered into as partof a conduit arrangement, as defined in theU.S.-Z Treaty. Even if there is no conduitarrangement, however, the one-percent ex-cise tax under section 4371(3) still applieswhen the foreign insurer or reinsurer payspremiums to the nonqualified foreign rein-surer.

EFFECT ON OTHER REVENUERULING(S)

Rev. Rul. 58–612 is clarified and am-plified.


Various personnel from the Office ofthe Associate Chief Counsel (Interna-tional) participated in the development ofthis revenue ruling. For further informa-

tion regarding this revenue ruling, contactMr. Willard Yates of the Office of theAssociate Chief Counsel (International) at(202) 622–3880 (not a toll-free call).

Section 4372.—DefinitionsA revenue ruling discusses whether the reinsur-

ance excise tax imposed by section 4371(3) of theInternal Revenue Code (Code) on policies of reinsur-ance covering contracts taxable under paragraph (1),(2) or (3) of section 4371 applies to reinsurance pre-miums paid by one foreign insurer or reinsurer to an-other. See Rev. Rul. 2008-15, page 633.


Section 4373.—ExemptionsA revenue ruling discusses whether the reinsur-

ance excise tax imposed by section 4371(3) of theInternal Revenue Code (Code) on policies of reinsur-ance covering contracts taxable under paragraph (1),(2) or (3) of section 4371 applies to reinsurance pre-miums paid by one foreign insurer or reinsurer to an-other. See Rev. Rul. 2008-15, page 633.


Section 4374.—Liabilityfor Tax

A revenue ruling discusses whether the reinsur-ance excise tax imposed by section 4371(3) of theInternal Revenue Code (Code) on policies of reinsur-ance covering contracts taxable under paragraph (1),(2) or (3) of section 4371 applies to reinsurance pre-miums paid by one foreign insurer or reinsurer to an-other. See Rev. Rul. 2008-15, page 633.


Section 7270.—InsurancePolicies


2008–12 I.R.B. 636 March 24, 2008

Part III. Administrative, Procedural, and MiscellaneousAlternative Disability MortalityTables — Continued Relianceon Revenue Ruling 96–7

Notice 2008–29

This notice provides guidance regard-ing the mortality tables that are permit-ted to be used to determine present valueswith respect to individuals who are enti-tled to benefits under a qualified definedbenefit pension plan on account of disabil-ity. This notice reflects changes to the min-imum funding requirements made by thePension Protection Act of 2006, Pub. L.109–280 (PPA ’06).

Background

Pursuant to changes made by PPA ’06,§ 412 of the Internal Revenue Code pro-vides minimum funding requirements forqualified defined benefit pension plansthat generally apply for plan years begin-ning on or after January 1, 2008. Section430 specifies the minimum required con-tribution that must be made for a singleemployer defined benefit plan under § 412as modified by PPA ’06. Section 431specifies the amount that must be con-tributed under § 412 to a multiemployerdefined benefit plan to avoid an accumu-lated funding deficiency in order to satisfythe requirements of § 412 as modified byPPA ’06. Prior to these changes, the min-imum funding requirements for qualifiedpension plans were set forth in § 412.

Prior to amendment by PPA ’06,§ 412(l)(7)(C)(ii) required the use of cer-tain mortality tables to determine a plan’scurrent liability, effective for plan yearsbeginning after December 31, 1994. Sec-tion 412(l)(7)(C)(iii)(I) provided that, forpurposes of determining current liabilityfor plan years beginning after December31, 1995, the Secretary was required toestablish mortality tables that were per-mitted to be used, in lieu of the tablesunder § 412(l)(7)(C)(ii), to determine cur-rent liability under § 412(l) for individualswho were entitled to benefits under theplan on account of disability. The Sec-retary was required to establish separatetables for individuals whose disabilitiesoccurred in plan years beginning before

January 1, 1995, and for individuals whosedisabilities occurred in plan years begin-ning after December 31, 1994. Under§ 412(l)(7)(C)(iii)(II), the mortality tablefor individuals whose disabilities occurredin plan years beginning after December31, 1994, applied only with respect toindividuals who were disabled within themeaning of title II of the Social SecurityAct and the regulations thereunder.

Rev. Rul. 96–7, 1996–1 C.B. 59, whichwas effective for plan years beginning afterDecember 31, 1995, set forth the mortalitytables that were permitted to be used pur-suant to § 412(l)(7)(C)(iii)(I) for disabili-ties occurring in plan years beginning be-fore January 1, 1995, and for disabilitiesoccurring in plan years beginning after De-cember 31, 1994.

Section 430(h)(3) provides rules re-garding the mortality tables to be used indetermining present values and makingother computations under § 430. Section430(h)(3)(D) provides that, for purposesof determining any present value or mak-ing any computation under § 430 for planyears beginning after December 31, 2007,the Secretary is to establish mortality ta-bles that may be used, in lieu of the tablesunder § 430(h)(3)(A), for individuals whoare entitled to benefits under the plan onaccount of disability. The Secretary is toestablish separate tables for individualswhose disabilities occurred in plan yearsbeginning before January 1, 1995, andfor individuals whose disabilities occurin plan years beginning after December31, 1994. Under § 430(h)(3)(D)(ii), themortality table for individuals whose dis-abilities occur in plan years beginningafter December 31, 1994, applies onlywith respect to individuals who are dis-abled within the meaning of title II ofthe Social Security Act and the regula-tions thereunder. Thus, the standard forthe establishment of mortality tables thatare permitted to be used with respect toindividuals who are entitled to benefitsunder the plan on account of disabilityis the same under § 430(h)(3)(D) as thestandard that previously applied under§ 412(l)(7)(C)(iii).

Section 431 specifies the minimumfunding requirements that apply to mul-tiemployer plans. Under § 431(c)(6)(B),

a plan’s full funding limitation cannot beless than the excess (if any) of 90 per-cent of the current liability of the plan(including the expected increase in currentliability due to benefits accruing duringthe plan year) over the value of the plan’sassets. Section 431(c)(6)(D)(iv), (v), and(vi) provide rules regarding the mortal-ity tables to be used in determining aplan’s current liability for this purpose.Section 431(c)(6)(D)(v)(I) provides that,for purposes of determining a plan’s cur-rent liability, the Secretary is to establishmortality tables that may be used, in lieuof the tables that apply generally under§ 431(c)(6)(D)(iv), for individuals whoare entitled to benefits under the plan onaccount of disability. The Secretary is toestablish separate tables for individualswhose disabilities occurred in plan yearsbeginning before January 1, 1995, andfor individuals whose disabilities occurin plan years beginning after December31, 1994. Under § 431(c)(6)(D)(v)(II),the mortality table for individuals whosedisabilities occur in plan years beginningafter December 31, 1994, applies onlywith respect to individuals who are dis-abled within the meaning of title II ofthe Social Security Act and the regula-tions thereunder. Thus, like the standardfor the establishment of mortality tableswith respect to disabled participants un-der § 430(h)(3)(D), the standard for theestablishment of mortality tables thatare permitted to be used with respect toindividuals who are entitled to benefitsunder a plan on account of disability un-der § 431(c)(6)(D)(v) is the same as thestandard that previously applied under§ 412(l)(7)(C)(iii).

Continued Use of Revenue Ruling 96–7Disabled Mortality Tables

Until further guidance is issued, therules of Rev. Rul. 96–7 (including themortality tables set forth in Rev. Rul.96–7 as well as the rules regarding the de-termination of whether a benefit is payableon account of disability) apply under§§ 430(h)(3)(D) and 431(c)(6)(D)(v). Asprovided in § 1.430(h)(3)–2(c)(1)(iv) ofthe proposed Income Tax Regulations, thealternative mortality tables in Rev. Rul.96–7 are permitted to be applied where

March 24, 2008 637 2008–12 I.R.B.

employer-specific substitute mortality ta-bles are used for nondisabled participants,but only if mortality experience with re-spect to disabled individuals for whichthose tables are used has been excluded indeveloping mortality rates for the substi-tute mortality tables.

Comments Requested

The Service is considering issu-ing updated mortality tables under§§ 430(h)(3)(D) and 431(c)(6)(D)(v) thatcould be used with respect to individualswho are entitled to pension plan benefitson account of disability. Comments arerequested regarding the construction ofthese updated mortality tables, includingsuggestions for sources of updated data re-garding mortality experience with respectto disabled pension plan participants. Inaddition, comments are requested con-cerning the use of select and ultimate mor-tality tables under which mortality ratesvary depending on the individual’s ageand the number of years that the individ-ual has been disabled. Written commentsshould be submitted by June 23, 2008.Send submissions to CC:PA:LPD:DRU(Notice 2008–29), Room 5203, InternalRevenue Service, POB 7604, Ben FranklinStation, Washington, D.C. 20044. Com-ments may be hand delivered betweenthe hours of 8 a.m. and 4 p.m., Mon-day through Friday, to CC:PA:LPD:DRU(Notice 2008–29), Courier’s Desk, Inter-nal Revenue Service, 1111 ConstitutionAvenue, NW, Washington, DC, or sentelectronically via the Federal eRulemak-ing portal at http://www.regulations.gov(Notice 2008–29). All comments will beavailable for public inspection.

Drafting Information

The principal author of this noticeis David Ziegler of the Tax Exemptand Government Entities Division, Em-ployee Plans. For further informationregarding this notice, please contactthe Employee Plans taxpayer assistancetelephone service at 1–877–829–5500(a toll-free number) between the hoursof 8:00 a.m. and 4:30 p.m. East-ern Time, Monday through Friday.Mr. Ziegler can be contacted via e-mail [email protected].

Miscellaneous PensionProtection Act Changes

Notice 2008–30

I. PURPOSE AND BACKGROUND

This notice provides guidance in theform of questions and answers with re-spect to certain distribution-related pro-visions of the Pension Protection Act of2006, P.L. 109–280 (“PPA ’06”), thatare effective in 2008. This notice alsoprovides, in Part V, guidance on amendingplans to require that distribution of excessdeferrals includes earnings from the end ofthe taxable year to the date of distribution(“gap-period” earnings).

The sections of PPA ’06 addressed inthis notice are § 824 (relating to rolloversfrom eligible retirement plans to RothIRAs), § 1004 (relating to additional sur-vivor annuity options), and § 302 (relatingto interest rate assumptions for lump sumdistributions). Notice 2007–7, 2007–5I.R.B. 395, provides guidance with respectto certain provisions of PPA ’06 that areprimarily related to distributions and thatwere effective beginning in 2007 or ear-lier.

II. SECTION 824 OF PPA ’06

Prior to amendment by PPA ’06, § 408Aof the Code provided that a Roth IRAcould only accept a rollover contribu-tion of amounts distributed from anotherRoth IRA, from a nonRoth IRA (i.e.,a traditional or SIMPLE IRA) or froma designated Roth account described in§ 402A. These rollover contributions toRoth IRAs are called “qualified rollovercontributions.” A qualified rollover con-tribution from a nonRoth IRA to a RothIRA is called a “conversion.” An indi-vidual who rolls over an amount from anonRoth IRA to a Roth IRA must includein gross income any portion of the con-version amount that would be includiblein gross income if the amount were dis-tributed without being rolled over. Fordistributions before 2010, a conversioncontribution is permitted only if the IRAowner’s adjusted gross income does notexceed certain limits.

Section 824 of PPA ’06 amended thedefinition of qualified rollover contribu-tion in § 408A of the Code to include

additional plans. Under this expansion,in addition to the rollovers described inthe preceding paragraph, a Roth IRA canaccept rollovers from other eligible retire-ment plans (as defined in § 402(c)(8)(B)).The amendments made by § 824 ofPPA ’06 are effective for distributionsmade after December 31, 2007.

Q–1. Can distributions from a qualifiedplan described in § 401(a) be rolled over toa Roth IRA?

A–1. Yes. The rollover can be madethrough a direct rollover from the planto the Roth IRA or an amount can bedistributed from the plan and contributed(rolled over) to the Roth IRA within 60days. In either case, the amount rolled overmust be an eligible rollover distribution(as defined in § 402(c)(4)) and, pursuantto § 408A(d)(3)(A), there is included ingross income any amount that would beincludible if the distribution were notrolled over. In addition, for taxable yearsbeginning before January 1, 2010, an in-dividual can not make a qualified rollovercontribution from an eligible retirementplan other than a Roth IRA if, for the yearthe eligible rollover distribution is made,he or she has modified adjusted gross in-come (“MAGI”) exceeding $100,000 or ismarried and files a separate return.

Q–2. Can distributions from other typesof retirement plans be rolled over to a RothIRA?

A–2. Subject to the limitations de-scribed in the final sentence of A–1 ofthis notice, the new definition of qualifiedrollover contribution in § 408A(e) includesdistributions from annuity plans describedin § 403(a) and (b) and from eligible gov-ernmental plans under § 457(b).

Q–3. Does the additional tax under§ 72(t) apply to a qualified rollover con-tribution from an eligible retirement planother than a Roth IRA?

A–3. No. Pursuant to § 408A(d)(3)(A)(ii), the additional tax under § 72(t)does not apply to rollovers from an eligibleretirement plan other than a Roth IRA.However, as with conversions, if a taxableamount rolled into a Roth IRA froman eligible retirement plan other than aRoth IRA is distributed within 5 years,§ 72(t) applies to such distribution as ifit were includible in gross income. See§ 408A(d)(3)(F).

Q–4. Under § 401(a)(31)(A), musta plan permit a distributee of an eligi-

2008–12 I.R.B. 638 March 24, 2008

ble rollover distribution to elect a directrollover to a Roth IRA?

A–4. Yes. Section 401(a)(31) requiresthat a plan follow a distributee’s election tohave an eligible rollover distribution paidin a direct rollover to an eligible retirementplan specified by the distributee. Section1.401(a)(31)–1 of the Income Tax Regula-tions provides rules for direct rollovers, in-cluding exceptions for small amounts andmultiple distributions.

Q–5. Is the plan administrator respon-sible for assuring the distributee is eligibleto make a rollover to a Roth IRA?

A–5. No, the plan administrator is notresponsible for assuring the distributee iseligible to make a rollover to a Roth IRA.However, a distributee that is ineligibleto make a rollover to a Roth IRA mayrecharacterize the contribution pursuant to§ 408A(d)(6).

Q–6. What are the withholding require-ments for an eligible rollover distributionthat is rolled over to a Roth IRA?

A–6. An eligible rollover distributionpaid to an employee or the employee’sspouse is subject to 20% mandatory with-holding under § 3405(c). Pursuant to§ 3405(c)(2), an eligible rollover dis-tribution that a distributee elects, under§ 401(a)(31)(A), to have paid directly toan eligible retirement plan (including aRoth IRA) is not subject to mandatorywithholding, even if the distribution isincludible in gross income. Also, a distri-bution that is directly rolled over to a RothIRA by a nonspouse beneficiary pursuantto § 402(c)(11) (see Q&A–7 of this notice)is not subject to mandatory withholding.However, a distributee and a plan admin-istrator or payor are permitted to enter intoa voluntary withholding agreement withrespect to an eligible rollover distributionthat is directly rolled over from an eligibleretirement plan to a Roth IRA. See section3402(p) and the regulations thereunder forrules relating to voluntary withholding.

Q–7. Can beneficiaries make qualifiedrollover contributions to Roth IRAs?

A–7. Yes. In the case of a distributionfrom an eligible retirement plan other thana Roth IRA, the MAGI and filing statusof the beneficiary are used to determineeligibility to make a qualified rollovercontribution to a Roth IRA. Pursuant to§ 402(c)(11), a plan may but is not requiredto permit rollovers by nonspouse bene-ficiaries and a rollover by a nonspouse

beneficiary must be made by a directtrustee-to-trustee transfer. A nonspousebeneficiary that is ineligible to make aqualified rollover contribution to a RothIRA may recharacterize the contributionpursuant to § 408A(d)(6). A survivingspouse who makes a rollover to a RothIRA may elect either to treat the Roth IRAas his or her own or to establish the RothIRA in the name of the decedent with thesurviving spouse as the beneficiary. (SeeNotice 2007–7, Q&A–13, for a rule onhow to title a beneficiary IRA.) A non-spouse beneficiary cannot elect to treat theRoth IRA as his or her own. (See Notice2007–7, Part V.)

In the case of a rollover where the bene-ficiary does not treat the Roth IRA as his orher own, required minimum distributionsfrom the Roth IRA are determined in ac-cordance with Notice 2007–7, Q&As –17,–18 and –19.

III. SECTION 1004 OF PPA ’06

Section 401(a)(11) of the Code appliesto defined benefit plans and to certain de-fined contribution plans that are subject tothe funding standards of § 412 or that donot satisfy certain other requirements to beexempt from § 401(a)(11). Plans that aresubject to § 401(a)(11) must provide thataccrued benefits are payable, in the case ofa vested participant who does not die be-fore the annuity starting date, in the formof a qualified joint and survivor annuity(“QJSA”). Section 417(b) defines a QJSA,for a married participant, as an annuity forthe life of a participant with a survivor an-nuity for the life of the participant’s spousewhich is not less than 50% and not morethan 100% of the amount of the annuitypayable during the joint lives of the partic-ipant and the spouse. Section 417(a) gen-erally provides that a plan that is subjectto § 401(a)(11) must permit a participantto waive the QJSA, with spousal consent,during an applicable election period, andmust provide a written explanation to theparticipant of the terms and conditions ofthe QJSA.

Section 1004 of PPA ’06 amends§ 417 to require a plan that is subjectto § 401(a)(11) to offer to participants aspecified optional form of benefit as analternative to the QJSA. In particular, aplan that is subject to § 401(a)(11) mustprovide to a participant who waives the

QJSA an opportunity to elect a qualifiedoptional survivor annuity (“QOSA”) dur-ing the applicable election period, andmust provide a written explanation to par-ticipants of the terms and conditions of theQOSA. Section 1004 of PPA ’06 definesa QOSA as an annuity for the life of aparticipant with a survivor annuity for thelife of the participant’s spouse that is equalto a specified applicable percentage ofthe amount of the annuity that is payableduring the joint lives of the participant andthe spouse, and that is the actuarial equiv-alent of a single life annuity for the lifeof the participant. A QOSA also includesa distribution option in a form having theeffect of such an annuity.

Section 1107 of PPA ’06 permits a plansponsor to delay adopting a plan amend-ment pursuant to statutory provisions un-der PPA ’06 (or pursuant to any regulationissued under PPA ’06) until the last dayof the first plan year beginning on or afterJanuary 1, 2009 (January 1, 2011, in thecase of governmental plans). This amend-ment deadline applies to both interim anddiscretionary amendments that are madepursuant to PPA ’06 statutory provisionsor any regulation issued under PPA ’06.If § 1107 of PPA ’06 applies to a planamendment, the plan does not fail to sat-isfy the requirements of § 411(d)(6) by rea-son of the amendment except as providedby the Secretary of the Treasury. How-ever, see Q&A–14 of this notice, whichprovides that § 411(d)(6) relief does notapply to a plan amendment adopted pur-suant to § 1004 of PPA ’06.

Q–8. What level of spouse survivorannuity must be provided under a QOSA?

A–8. The level of spouse survivor an-nuity that must be provided under a QOSAdepends upon the level of spouse survivorannuity provided under a plan’s QJSA(that is, the QJSA form of benefit that isprovided to a married participant in theabsence of a waiver of such form of bene-fit). If the QJSA for a married participantprovides a survivor annuity for the life ofthe participant’s spouse that is less than75 percent of the amount of the annuitythat is payable during the joint lives of theparticipant and the participant’s spouse,the QOSA must provide a spouse survivorannuity percentage of 75 percent. If theQJSA for a married participant provides asurvivor annuity for the life of the partici-pant’s spouse that is greater than or equal

March 24, 2008 639 2008–12 I.R.B.

to 75 percent of the amount of the annuitythat is payable during the joint lives of theparticipant and the participant’s spouse,the QOSA must provide a spouse survivorannuity percentage of 50 percent.

Q–9. If, both before and after the effec-tive date of § 1004 of PPA ’06, a plan thatis subject to § 401(a)(11) offers, in additionto the QJSA, an optional joint and spousesurvivor annuity that is at least actuariallyequivalent to the plan’s single life annuityform of benefit payable at the same time asthe optional joint and spouse survivor an-nuity and that provides a spouse survivorannuity percentage equal to the spouse sur-vivor annuity percentage required to beprovided under a QOSA, must the plan beamended or the plan’s administration bechanged in order to implement § 1004 ofPPA ’06?

A–9. No. A plan that is subject to§ 401(a)(11) must provide an optional jointand spouse survivor annuity that (i) is atleast actuarially equivalent to the plan’ssingle life annuity form of benefit payableat the same time as the optional joint andspouse survivor annuity, and (ii) provides aspouse survivor annuity percentage that isequal to the spouse survivor annuity per-centage required to be provided under aQOSA. The plan need not be amendedso that the optional joint and spouse sur-vivor annuity is designated as a QOSA,and its administrative procedures need notbe revised to designate the optional formof benefit as a QOSA. For example, aplan that, both before and after the effec-tive date of § 1004 of PPA ’06, providesa QJSA for a married participant that in-cludes a spouse survivor annuity percent-age of 50 percent, and also provides anoptional joint and spouse survivor annu-ity that includes a spouse survivor annu-ity percentage of 75 percent and is at leastactuarially equivalent to the plan’s singlelife annuity form of benefit payable at thesame time as the optional joint and spousesurvivor annuity, complies with § 1004 ofPPA ’06 without the need for any amend-ment or other administrative change.

Q–10. If a plan that is subject to§ 401(a)(11) provides a QJSA that is morevaluable than the plan’s single life annuityform of benefit, must the plan’s QOSA beat least actuarially equivalent to the QJSAor need the plan’s QOSA only be at leastactuarially equivalent to the plan’s single

life annuity form of benefit payable at thesame time as the QOSA?

A–10. A plan subject to § 401(a)(11)must provide a QOSA that is at least ac-tuarially equivalent to the plan’s form ofbenefit that is a single life annuity for thelife of the participant payable at the sametime as the QOSA. The QOSA need not beactuarially equivalent to the plan’s QJSA.

Q–11. If a participant elects to receivea distribution in the form of a QOSA, mustthe participant’s spouse consent to the par-ticipant’s election?

A–11. In general, spousal consent is re-quired for a participant to waive a plan’sQJSA form of distribution and elect analternative distribution form. However,§ 1.401(a)–20, Q&A–16, provides that aparticipant may elect out of the QJSA, infavor of an actuarially equivalent alterna-tive joint and survivor annuity that satis-fies the conditions to be a QJSA, with-out spousal consent. Because a QOSA, bydefinition, satisfies the conditions to be aQJSA, no spousal consent is required if aplan participant elects a QOSA that is ac-tuarially equivalent to the plan’s QJSA. Ifthe QOSA is not actuarially equivalent tothe QJSA, spousal consent is required forthe participant to waive the QJSA and electthe QOSA.

Q–12. How does a plan that is sub-ject to § 401(a)(11) satisfy the requirementin § 417(a)(3)(i), as amended by §1004 ofPPA ’06, that the plan provide to a partici-pant a written explanation of the terms andconditions of the QOSA available to theparticipant?

A–12. A plan that is subject to§ 401(a)(11) can satisfy the requirementthat it provide to a participant a writtenexplanation of the terms and conditions ofthe QOSA available to the participant bysatisfying the written explanation require-ments of § 1.417(a)(3)–1. In satisfyingthese written explanation requirements,the plan must treat the QOSA as an op-tional form of benefit presently availableto participants under the plan. The writtenexplanation need not designate the op-tional form of benefit as the plan’s QOSA.

Q–13. Must a plan that is subject to§ 401(a)(11) offer to participants, as an al-ternative to a qualified preretirement sur-vivor annuity described in § 417(c), a pre-retirement survivor annuity that is basedon a QOSA?

A–13. No. A plan that is subject to§ 401(a)(11) must offer participants aQOSA that is an alternative form of distri-bution to the QJSA. There is no require-ment that the plan offer to participants, asan alternative to a qualified preretirementsurvivor annuity described in § 417(c),a preretirement survivor annuity that isbased on a QOSA.

Q–14. How does § 1107 of PPA ’06,which provides certain rules regardingamendments made pursuant to PPA ’06,apply to plan amendments adopted pur-suant to § 1004 of PPA?

A–14. If a plan that is subject to§ 401(a)(11) is amended to implement aQOSA within the period established in§ 1107(b)(2)(A) of PPA ’06, and the planis operated as if the amendment were ineffect during the period from the effec-tive date of the changes made to § 417 by§ 1004 of PPA ’06 until the date of theamendment, the plan is treated, pursuantto § 1107 of PPA ’06, as being operatedin accordance with its terms during suchperiod, and the amendment is treated asbeing adopted on the effective date ofsuch changes made to § 417. However,an amendment that implements a QOSAis not eligible for any relief, pursuant to§ 1107 of PPA ’06, from the requirementsof § 411(d)(6). Thus, for example, a planamendment that implements a QOSA mayeliminate a distribution form or reduceor eliminate a subsidy with respect to adistribution form only to the extent suchreduction or elimination is permitted un-der § 1.411(d)–3.

Q–15. What is the effective date ofthe changes made to § 417 by § 1004 ofPPA ’06?

A–15. In general, the changes to § 417made by § 1004 of PPA ’06 apply to dis-tributions from a plan that is subject to§ 401(a)(11) with annuity starting dates inplan years beginning after December 31,2007. However, in the case of a plan thatis subject to § 401(a)(11) and that is main-tained pursuant to one or more collectivebargaining agreements between employeerepresentatives and one or more employersratified on or before August 17, 2006 (thedate of enactment of PPA ’06), the changesto § 417 made by § 1004 of PPA ’06 ap-ply to distributions with annuity startingdates during plan years beginning on orafter the earlier of (i) January 1, 2008 or,if later, the date on which the last collec-

2008–12 I.R.B. 640 March 24, 2008

tive bargaining agreement related to theplan terminates (determined without re-gard to any extensions to a collective bar-gaining agreement made after August 17,2006), or (ii) January 1, 2009. In the eventa participant elects a distribution with aretroactive annuity starting date (pursuantto § 1.417(e)–1(b)(3)(iv)) that is before theeffective date of § 1004 of PPA ’06, thedate of the first actual payment of bene-fits based on the retroactive annuity start-ing date is substituted for the annuity start-ing date for purposes of applying the rulesof this paragraph.

IV. SECTION 302 OF PPA ’06

Section 417(e)(3) of the Code providesrules for the determination of the presentvalue of plan benefits for purposes of§ 417(e). Section 417(e)(3)(A) generallyprovides that, for purposes of § 417(e)(1)and (e)(2), the present value is not per-mitted to be less than the present valuecalculated by using the applicable mortal-ity table and the applicable interest rate asdefined in § 417(e)(3)(B) and (C).

For plan years beginning prior to Jan-uary 1, 2008, § 417(e)(3)(A)(ii)(II) definesthe term “applicable interest rate” as theannual rate of interest on 30-year Treasurysecurities for the month before the dateof distribution or such other time as theSecretary may by regulations prescribe(the “pre-PPA ’06 applicable interestrate”). In addition, for the same planyears, § 417(e)(3)(A)(ii)(I) defines theterm “applicable mortality table” as themortality table prescribed by the Secretaryand provides for such table to be based onthe prevailing commissioners’ standardtable (described in § 807(d)(5)(A)) usedto determine group reserves for group an-nuity contracts issued on the date as ofwhich the present value is determined (the“pre-PPA ’06 applicable mortality table”).

For plan years beginning on or afterJanuary 1, 2008, § 302 of PPA ’06 changesthe present value determination under§ 417(e)(3). For such years, § 417(e)(3)(C)defines the term “applicable interest rate”as the adjusted first, second, and thirdsegment rates applied under rules simi-lar to the rules of § 430(h)(2)(C) for themonth before the date of the distributionor such other time as the Secretary may byregulations prescribe (the “post-PPA ’06applicable interest rate”). For this purpose,

the adjusted first, second, and third seg-ment rates are determined without regardto the 24-month averaging provided under§ 430(h)(2)(D)(i), and § 417(e)(3)(D)(ii)provides a transition rule that phases inthe use of the segment rates over 5 years.Also, for such years, § 417(e)(3)(B) de-fines the term “applicable mortality table”as a mortality table, modified as appropri-ate by the Secretary, based on the mortalitytable specified for the plan year undersubparagraph (A) of § 430(h)(3) (withoutregard to subparagraph (C) or (D) of suchsection) (the “post-PPA ’06 applicablemortality table”).

Section 1.401(a)–20, Q&A–16, pro-vides that, in the case of a married partici-pant, the QJSA provided under a plan thatis subject to § 401(a)(11) must be at leastas valuable as any other optional form ofbenefit payable under the plan at the sametime, and further provides that a plan doesnot fail to satisfy this requirement merelybecause the amount payable under an op-tional form of benefit that is subject to theminimum present value requirement of§ 417(e)(3) is calculated using the appli-cable interest rate and applicable mortalitytable under § 417(e)(3).

As noted in Part III above, § 1107 ofPPA ’06 provides certain rules with respectto plan amendments adopted pursuant tostatutory provisions under PPA ’06.

Rev. Rul. 2007–67, 2007–48 I.R.B.1047, provides guidance regarding the im-plementation of § 302 of PPA ’06, includ-ing guidance regarding the application of§ 1107 of PPA ’06 to amendments adoptedpursuant to § 302 of PPA ’06.

Q–16. If, after § 302 of PPA ’06 iseffective, a plan is amended, during theperiod established in § 1107(b)(2)(A)of PPA ’06, to provide that the amountpayable under an optional form of benefitthat is subject to the minimum presentvalue requirement of § 417(e)(3) iscalculated as the more favorable toparticipants of (i) the amount calculated byusing the pre-PPA ’06 applicable mortalitytable and pre-PPA ’06 applicable interestrate, or (ii) the amount calculated by usingthe post-PPA ’06 applicable mortality tableand post-PPA ’06 applicable interest rate,will the plan fail to satisfy the requirementthat the QJSA for a married participant beat least as valuable as any other form ofbenefit payable under the plan at the sametime?

A–16. A plan does not fail to sat-isfy the requirement that the QJSA fora married participant be at least as valu-able as any other form of benefit payableunder the plan at the same time merelybecause the amount payable under an op-tional form of benefit that is subject tothe minimum present value requirementof § 417(e)(3) is calculated as the morefavorable to participants of (i) the amountcalculated by using the pre-PPA ’06 ap-plicable mortality table and pre-PPA ’06applicable interest rate, or (ii) the amountcalculated by using the post-PPA ’06 ap-plicable mortality table and post-PPA ’06applicable interest rate. This special treat-ment for amounts calculated by using thepre-PPA ’06 applicable mortality tableand pre-PPA ’06 applicable interest rateapplies only through the end of the perioddescribed in § 1107(b)(2)(A) of PPA ’06.It is anticipated that § 1.401(a)–20,Q&A–16, will be amended to reflect thisspecial treatment.

Q–17. If a plan is amended as describedin Q&A–16 of this notice, but providesthat benefits cease to be calculated by us-ing the pre-PPA ’06 applicable mortalitytable and pre-PPA ’06 applicable interestrate after a specified period, does relief un-der § 1107 of PPA ’06, as described in Rev.Rul. 2007–67, apply to the amendment?

A–17. In general, relief under § 1107of PPA ’06 applies to an amendment thatprovides the more favorable to partici-pants of an amount calculated by usingthe pre-PPA ’06 applicable mortality ta-ble and pre-PPA ’06 applicable interestrate or an amount calculated by using thepost-PPA ’06 applicable mortality tableand post-PPA ’06 applicable interest rate,even if the pre-PPA ’06 applicable in-terest rate and/or pre-PPA ’06 applicablemortality table apply only for a specifiedperiod of time (as long as the amendmentis adopted during the period established in§ 1107(b)(2)(A) of PPA ’06). For example,if a plan is amended to provide that theamount payable under an optional formof benefit that is subject to the minimumpresent value requirements of § 417(e)(3)is calculated in the manner described inQ&A–16 of this notice (i.e., pursuant toa better-of calculation) for a specifiedperiod of time, and thereafter is calculatedwithout reference to the pre-PPA ’06applicable mortality table and pre-PPA ’06applicable interest rate, the plan will

March 24, 2008 641 2008–12 I.R.B.

not fail to satisfy the requirements of§ 411(d)(6) by reason of the amendment.

However, with respect to a particu-lar plan provision, relief under § 1107of PPA ’06 applies only to the firstplan amendment that implements thepost-PPA ’06 applicable interest rateand/or post-PPA ’06 applicable mortalitytable with respect to the provision, and anysubsequent amendment with respect to theprovision will not be treated as adopted“pursuant to” statutory provisions underPPA ’06, as required for relief under § 1107of PPA ’06. For purposes of determiningwhether an amendment that implementsthe post-PPA ’06 applicable interest rateand/or post-PPA ’06 applicable mortalitytable with respect to a particular planprovision is the first such amendment,amendments adopted on or before June30, 2008, are disregarded. Thus, if a planamendment is adopted that provides thatthe amount payable under an optional formof benefit that is subject to the minimumpresent value requirements of § 417(e)(3)is calculated in the manner described inQ&A–16 of this notice, and the plan issubsequently amended (during the periodestablished in § 1107 of PPA ’06) so thatthe amount payable is calculated withoutreference to the pre-PPA ’06 applicablemortality table and pre-PPA ’06 applicableinterest rate, the relief under § 1107 ofPPA ’06 will apply with respect to thesubsequent amendment only if the initialamendment was adopted on or before June30, 2008.

Q–18. Does the relief under § 1107of PPA ’06, as described in Rev. Rul.2007–67 and this notice, apply to a planamendment that replaces a plan referenceto the pre-PPA ’06 applicable mortal-ity table and/or pre-PPA ’06 applica-ble interest rate with a reference to thepost-PPA ’06 applicable mortality tableand/or post-PPA ’06 applicable interestrate, without regard to whether § 302 ofPPA ’06 requires such amendment?

A–18. The relief under § 1107 ofPPA ’06, as described in Rev. Rul.2007–67 and this notice, applies to anamendment to a plan that is subject to§ 401(a)(11) and that replaces a planreference to the pre-PPA ’06 applicablemortality table and/or pre-PPA ’06applicable interest rate with a reference tothe post-PPA ’06 applicable mortality tableand/or post-PPA ’06 applicable interest

rate, without regard to whether § 302 ofPPA ’06 requires such amendment. Forexample, if a plan calculates the amountof an optional form of benefit that is notsubject to the minimum present valuerequirements of § 417(e)(3) by reference tothe pre-PPA ’06 applicable mortality tableand/or pre-PPA ’06 applicable interestrate and the plan is amended, pursuant toan amendment adopted during the periodestablished in § 1107(b)(2)(A) of PPA ’06,so that it calculates the amount of theoptional form of benefit by reference to thepost-PPA ’06 applicable mortality tableand/or post-PPA ’06 applicable interestrate, the plan will not fail to satisfy therequirements of § 411(d)(6) by reason ofthe amendment.

V. GAP-PERIOD EARNINGS

The final regulations (T.D. 9324,2007–22 I.R.B. 1302) under § 402(g),published in the Federal Register (72 FR21103) on April 30, 2007, provide thatthe gap-period earnings must be includedwith the distribution of excess deferralsto the extent the employee is or would becredited with an allocable gain or loss onthose excess deferrals for the gap period,if the total amount were to be distributed.This gap-period earnings rule applies toboth pre-tax excess deferrals and excessdeferrals that are designated Roth contri-butions. The effective date for the ruleon gap-period earnings is taxable yearsbeginning on or after January 1, 2007.

Section 5.04 of Rev. Proc. 2007–44,2007–28 I.R.B. 54, generally requires aninterim plan amendment to be adopted bythe time described in section 5.05 of therevenue procedure when there is a statu-tory or regulatory change with respect toplan qualification requirements that willimpact provisions of the written plan doc-ument.

Q–19. Is a plan restatement submit-ted to the Service in Cycle B (February 1,2007, through January 31, 2008) or CycleC (February 1, 2008, through January 31,2009) required to provide for the inclusionof gap-period earnings in the distributionof excess deferrals?

A–19. Yes. As described in section12.03 of Rev. Proc. 2007–44, a restatedplan submitted to the Service in Cycle B orCycle C is required to provide for the dis-tribution of gap-period earnings. A plan

sponsor of a plan submitted before March24, 2008 that does not provide for the dis-tribution of gap-period earnings will beasked to amend the plan to include the dis-tribution of gap-period earnings in order toreceive a determination letter.

Q–20. Is an interim plan amendmentto provide for the inclusion of gap-periodearnings in the distribution of excess de-ferrals required to be adopted by the timedescribed in section 5.05 of Rev. Proc.2007–44?

A–20. No. An interim plan amendmentto provide for the inclusion of gap-periodearnings in the distribution of excess defer-rals will not be required to be adopted untilthe last day of the first plan year beginningon or after January 1, 2009.

Q–21. Are plans required to includegap-period earnings in the distribution ofexcess deferrals in accordance with the fi-nal regulations under § 402(g)?

A–21. Yes. Although the interim planamendment requirement has been delayeduntil 2009, plans must include gap-periodearnings in the distribution of excess defer-rals, effective for excess deferrals attribut-able to taxable years beginning on or afterJanuary 1, 2007.


The principal author of this notice isAngelique Carrington of the EmployeePlans, Tax Exempt and Government En-tities Division. For further informationregarding this notice, please contact theEmployee Plans taxpayer assistance an-swering service at 1–877–829–5500 (a tollfree number) or e-mail Ms. Carrington [email protected].

Credit for New QualifiedAlternative Motor Vehicles(Qualified Fuel Cell MotorVehicles)

Notice 2008–33

SECTION 1. PURPOSE

This notice sets forth interim guidance,pending the issuance of regulations, relat-ing to the new fuel cell motor vehicle creditunder § 30B(a)(1) and (b) of the InternalRevenue Code. Specifically, this notice

2008–12 I.R.B. 642 March 24, 2008

provides procedures for a vehicle manu-facturer (or, in the case of a foreign vehi-cle manufacturer, its domestic distributor)to certify to the Internal Revenue Service(Service) both:

(1) that a vehicle of a particular make,model, and model year meets certain re-quirements that must be satisfied to claimthe new qualified fuel cell motor vehiclecredit under § 30B(a)(1) and (b); and

(2) the amount of the credit allowablewith respect to that vehicle.

This notice also provides guidance totaxpayers who purchase vehicles regard-ing the conditions under which they mayrely on the vehicle manufacturer’s (or, inthe case of a foreign vehicle manufacturer,its domestic distributor’s) certification indetermining whether a credit is allowablewith respect to the vehicle and the amountof the credit. The Service and the Trea-sury Department expect that the regula-tions will incorporate the rules set forth inthis notice.

SECTION 2. BACKGROUND

Section 30B(a)(1) provides for a creditdetermined under § 30B(b) for certain newqualified fuel cell motor vehicles. Thebase amount of the new qualified fuel cellmotor vehicle credit varies with the grossvehicle weight rating of the vehicle. Thebase amount of the credit applicable to ve-hicles having a gross vehicle weight of notmore than 8,500 pounds is $8,000 for ve-hicles placed in service on or before De-cember 31, 2009, and $4,000 for vehiclesplaced in service after that date. The baseamount of the credit applicable to heaviervehicles varies from $10,000 to $40,000and is not reduced for vehicles placed inservice after December 31, 2009. Passen-ger automobiles and light trucks, as de-fined in section 4 of this notice are eligi-ble for an additional fuel economy amountthat varies with the rated fuel economy ofa qualifying vehicle compared to the 2002

model year city fuel economy for a vehiclein its weight class.

SECTION 3. SCOPE OF NOTICE

.01 Vehicles Covered. This notice ap-plies only to fuel cell motor vehicles. Thisnotice applies with respect to a fuel cellmotor vehicle whether such vehicle is apassenger automobile, a light truck, or amotor vehicle other than a passenger au-tomobile or light truck.

.02 Rules Common to All QualifyingVehicles. This notice does not address anumber of rules that are common to allmotor vehicles that qualify for credits un-der § 30B. These rules include: (1) rulesunder which lessors may claim the cred-its allowable under § 30B; (2) the rulepreventing the credits from being used toreduce alternative minimum tax liability;and (3) rules relating to recapture of thecredit. Certain rules applicable to all mo-tor vehicles that qualify for credits under§ 30B are described in Fact Sheet 2007–9(http://www.irs.ustreas.gov/newsroom/article/0,,id=165649,00.html).

SECTION 4. MEANING OF TERMS

The following definitions apply for pur-poses of this notice:

(1) Passenger Automobile and LightTruck. Section 30B provides that theterms “passenger automobile” and “lighttruck” have the meaning given in regula-tions prescribed by the Administrator ofthe Environmental Protection Agency forpurposes of the administration of Title IIof the Clean Air Act (42 U.S.C. 7521 etseq.). Those regulations currently do notinclude a definition of these terms, but§ 30B(b)(2)(B) provides the 2002 modelyear city fuel economy tables that mustbe used to determine the amount of thecredit for passenger automobiles and lighttrucks. Those tables do not prescribe thefuel economy for vehicles having a grossvehicle weight of more than 8,500 pounds.

Accordingly, until either the Environmen-tal Protection Agency issues regulations orfuture guidance issued by the Service pro-vides otherwise (whichever occurs first),any vehicle having a gross vehicle weightof more than 8,500 pounds will not betreated as a passenger automobile or lighttruck for purposes of this notice.

(2) City Fuel Economy. The term “cityfuel economy” has the meaning prescribedin 40 CFR § 600.002–85(11). If fuel isstored on board a fuel cell motor vehicleas hydrogen and not in a form that requiresreformation prior to use, city fuel economyis determined by reference to the consump-tion of hydrogen. If fuel is stored on boarda fuel cell motor vehicle in a form that re-quires reformation prior to use, city fueleconomy is determined by reference to theconsumption of such fuel.

(3) Gasoline Gallon Equivalent. In thecase of a motor vehicle that does not usegasoline, the 2002 model year city fueleconomy is determined on a gasoline-gal-lon-equivalent basis. If fuel is stored onboard a fuel cell motor vehicle as hydrogenand not in a form that requires reformationprior to use, the gasoline gallon equivalentfor the 2002 model year city fuel economyis determined by converting miles per gal-lon of gasoline into miles per kilogram ofhydrogen at a conversion ratio of 0.98 mileper kilogram of hydrogen for each mile pergallon of gasoline. Thus, for example, the2002 model year city fuel economy for ahydrogen-fueled passenger automobile inthe 7,000 to 8,500 pounds vehicle iner-tia weight class is 11.1 miles per kilogramof hydrogen (0.98 x 11.3 (the 2002 modelyear city fuel economy in miles per gallonof gasoline)). If fuel (other than gasoline)is stored on board a fuel cell motor vehiclein a form that requires reformation prior touse, the gasoline gallon equivalent for the2002 model year city fuel economy may beobtained from the Environmental Protec-tion Agency, Office of Transportation andAir Quality at the following address:

Mailing AddressUSEPA HeadquartersAriel Rios Building1200 Pennsylvania Avenue, N.W.Mail Code: 6401AWashington, DC 20460

Courier AddressUSEPA HeadquartersAriel Rios Building1200 Pennsylvania Avenue, N.W.Room 6502AWashington, DC 20004

March 24, 2008 643 2008–12 I.R.B.

(4) Vehicle Inertia Weight Class. Theterm “vehicle inertia weight class” means,with respect to a motor vehicle, its inertiaweight class determined under 40 CFR§ 86.129–94. Under 40 CFR § 86.082–2,the inertia weight class is the class (agroup of test weights) into which a vehicleis grouped based on its loaded vehicleweight in accordance with the provisionsof 40 CFR part 86.

SECTION 5. MANUFACTURER’SCERTIFICATION

.01 When Certification Permitted. Avehicle manufacturer (or, in the case of aforeign vehicle manufacturer, its domesticdistributor) may certify to purchasers thata vehicle of a particular make, model, andmodel year meets all requirements (otherthan those listed in section 5.02 of this no-tice) that must be satisfied to claim the newqualified fuel cell motor vehicle credit, andthe amount of the credit allowable under§ 30B(a)(1) and (b) with respect to thevehicle, if the following requirements aremet:

(1) The manufacturer (or, in the case ofa foreign vehicle manufacturer, its domes-tic distributor) has submitted to the Ser-vice, in accordance with section 6 of thisnotice, a certification with respect to thevehicle and the certification satisfies therequirements of section 5.03 of this notice;and

(2) The manufacturer (or, in the case ofa foreign vehicle manufacturer, its domes-tic distributor) has received an acknowl-edgment of the certification from the Ser-vice.

.02 Purchaser’s Reliance. Except asprovided in section 5.05 of this notice, apurchaser of a vehicle may rely on themanufacturer’s (or, in the case of a foreignvehicle manufacturer, its domestic distrib-utor’s) certification concerning the vehicleand the amount of the credit allowable withrespect to the vehicle (including cases inwhich the certification is received after thepurchase of the vehicle). The purchasermay claim a credit in the certified amountwith respect to the vehicle if the followingrequirements are satisfied:

(1) The vehicle is placed in service bythe taxpayer after December 31, 2005, andis purchased on or before December 31,2014;

(2) The original use of the vehicle com-mences with the taxpayer;

(3) The vehicle is acquired for use orlease by the taxpayer, and not for resale;and

(4) The vehicle is used predominantlyin the United States.

.03 Content of Certification.(1) All Vehicles. For all vehicles, the

certification must contain the following in-formation:

(a) The name, address, and taxpayeridentification number of the certifying en-tity;

(b) The make, model, model year, andany other appropriate identifiers of the mo-tor vehicle;

(c) A statement that the vehicle is madeby a manufacturer;

(d) The amount of the credit for the ve-hicle (showing computations);

(e) The gross vehicle weight rating ofthe vehicle;

(f) A statement that the vehicle is pro-pelled by power derived from one or morecells that convert chemical energy directlyinto electricity by combining oxygen withhydrogen fuel which is stored on board thevehicle in any form and may or may notrequire reformation prior to use;

(g) A statement that the vehicle com-plies with the applicable provisions of theClean Air Act;

(h) A statement that the vehicle com-plies with the applicable air quality pro-visions of state law of each state that hasadopted the provisions under a waiver un-der § 209(b) of the Clean Air Act or a listidentifying each state that has adopted ap-plicable air quality provisions with whichthe vehicle does not comply;

(i) A statement that the vehicle com-plies with the motor vehicle safety pro-visions of 49 U.S.C. §§ 30101 through30169; and

(j) A declaration, applicable to thecertification and any accompanying doc-uments, signed by a person currentlyauthorized to bind the manufacturer (or, inthe case of a foreign vehicle manufacturer,its domestic distributor) in these matters,in the following form:

“Under penalties of perjury, I declarethat I have examined this certification, in-cluding accompanying documents, and tothe best of my knowledge and belief, thefacts presented in support of this certifica-tion are true, correct, and complete.”

(2) Passenger Automobiles and LightTrucks. If the vehicle is a passenger auto-mobile or light truck, the certification mustinclude a copy of the certificate (receivedon or after August 8, 2005) that the vehiclemeets or exceeds the applicable Bin 5 TierII emission standard established in regu-lations prescribed by the Administrator ofthe Environmental Protection Agency un-der § 202(i) of the Clean Air Act for thatmake and model year vehicle.

(3) Additional Fuel Economy Credit. Ifthe manufacturer (or, in the case of a for-eign manufacturer, its domestic distribu-tor) is certifying that a passenger automo-bile or light truck is eligible for the addi-tional fuel economy credit allowable un-der § 30B(b)(2), the certification must alsocontain the following information:

(a) The vehicle inertia weight class ofthe vehicle; and

(b) The city fuel economy of the vehi-cle.

.04 Acknowledgment of Certification.The Service will review the original signedcertification and issue an acknowledgmentletter to the vehicle manufacturer (or, in thecase of a foreign vehicle manufacturer, itsdomestic distributor) within 30 days of re-ceipt of the request for certification. Thisacknowledgment letter will state whetherpurchasers may rely on the certification.

.05 Effect of Erroneous Certification.The acknowledgment that the Service pro-vides for a certification is not a determina-tion that a vehicle qualifies for the credit,or that the amount of the credit is correct.The Service may, upon examination (andafter any appropriate consultation with theDepartment of Transportation or the Envi-ronmental Protection Agency), determinethat the vehicle is not a new qualified fuelcell motor vehicle or that the amount of thecredit determined by the manufacturer (or,in the case of a foreign vehicle manufac-turer, its domestic distributor) to be allow-able with respect to the vehicle is incorrect.In either event, the manufacturer’s (or, inthe case of a foreign vehicle manufacturer,its domestic distributor’s) right to providea certification to future purchasers of newfuel cell motor vehicles will be withdrawn,and purchasers who acquire a vehicle afterthe date on which the Service publishes anannouncement of the withdrawal may notrely on the certification. Purchasers maycontinue to rely on the certification for ve-hicles they acquired on or before the date

2008–12 I.R.B. 644 March 24, 2008

on which the announcement of the with-drawal is published (including in cases inwhich the vehicle is not placed in serviceand the credit is not claimed until after thatdate), and the Service will not attempt tocollect any understatement of tax liabilityattributable to such reliance. Manufactur-ers (or, in the case of foreign vehicle man-ufacturers, their domestic distributors) arereminded that an erroneous certification oran erroneous quarterly report may result inthe imposition of penalties—

(1) under § 7206 for fraud and makingfalse statements; and

(2) under § 6701 for aiding and abettingan understatement of tax liability in theamount of $1,000 ($10,000 in the case ofunderstatements by corporations) per re-turn on which a credit is claimed in re-liance on the certification).

SECTION 6. TIME AND ADDRESSFOR FILING CERTIFICATION

.01 Time for Filing Certification. In or-der for a certification under section 5 ofthis notice to be effective for new quali-fied fuel cell motor vehicles placed in ser-vice during a calendar year beginning af-ter December 31, 2007, the certificationmust be received by the Service not laterthan December 31st of that calendar year.In order for a certification under section 5of this notice to be effective for new fuelcell motor vehicles placed in service dur-ing 2006 and 2007, the certification mustbe received by the Service not later thanDecember 31, 2008.

.02 Address for Filing. Certificationsunder section 5 of this notice must be sentto:

Internal Revenue ServiceIndustry Director, Large andMid-Size Business,

Heavy Manufacturing andTransportation

Metro Park Office Complex —LMSB

111 Wood Avenue, SouthIselin, New Jersey 08830

SECTION 7. PAPERWORKREDUCTION ACT

The collection of information containedin this notice has been reviewed and ap-proved by the Office of Management andBudget in accordance with the Paperwork

Reduction Act (44 U.S.C. 3507) undercontrol number 1545–2028.

An agency may not conduct or sponsor,and a person is not required to respondto a collection of information unless thecollection of information displays a validOMB control number.

The collections of information in thisnotice are in section 5. This informationis required to be collected and retained inorder to ensure that vehicles meet the re-quirements for the new qualified fuel cellmotor vehicle credit under § 30B(a)(1) and(b). This information will be used to de-termine whether the vehicle for which thecredit is claimed by a taxpayer is propertythat qualifies for the credit. The collectionof information is required to obtain a ben-efit. The likely respondents are corpora-tions and partnerships.

The estimated total annual reportingburden is 200 hours.

The estimated annual burden per re-spondent varies from 35 hours to 45 hours,depending on individual circumstances,with an estimated average burden of 40hours to complete the certification re-quired under this notice. The estimatednumber of respondents is 5.

The estimated annual frequency of re-sponses is on occasion.

Books or records relating to a collectionof information must be retained as longas their contents may become material inthe administration of any internal revenuelaw. Generally, tax returns and tax returninformation are confidential, as requiredby 26 U.S.C. 6103.

SECTION 8. DRAFTINGINFORMATION

The principal author of this notice isJaime C. Park of the Office of AssociateChief Counsel (Passthroughs & Special In-dustries). For further information regard-ing this notice, contact Jaime C. Park at(202) 622–3110 (not a toll-free call).

Distressed Asset Trust (DAT)Transaction

Notice 2008–34

The Internal Revenue Service (Service)and the Treasury Department are aware ofa type of transaction, described below, in

which a tax indifferent party, directly or in-directly, contributes one or more distressedassets (for example, a creditor’s interest indebt) with a high basis and low fair mar-ket value to a trust or series of trusts andsub-trusts, and a U.S. taxpayer acquiresan interest in the trust (and/or series oftrusts and/or sub-trusts) for the purpose ofshifting a built-in loss from the tax indif-ferent party to the U.S. taxpayer that hasnot incurred the economic loss. This no-tice alerts taxpayers and their representa-tives that this transaction (referred to as adistressed asset trust or DAT transaction)is a tax avoidance transaction and identi-fies this transaction, and substantially sim-ilar transactions, as listed transactions forpurposes of § 1.6011–4(b)(2) of the In-come Tax Regulations and §§ 6111 and6112 of the Internal Revenue Code. Thisnotice also alerts persons involved withthese transactions to certain responsibili-ties that may arise from their involvementwith these transactions.

BACKGROUND

The Service and Treasury Departmentare aware that, prior to October 23, 2004,taxpayers used partnerships improperlyto engage in variations of the distressedasset transaction described in this notice.The Coordinated Issue Paper, “DistressedAsset/Debt Coordinated Issue Paper,”LMSB–04–0407–031 (Apr. 18, 2007)describes the variation of the distressedasset transaction involving partnerships(DAD). The American Jobs Creation Actof 2004, Public Law 108–357 (118 Stat.1418) (AJCA), amended §§ 704, 734 and743 effective after October 22, 2004, forcontributions of built-in loss property to apartnership, for basis adjustment rules inthe case of a distribution for which there isa substantial basis reduction, and for basisadjustment rules in the case of a transferof a partnership interest for which there isa substantial built-in loss. The revisionsto §§ 704, 734 and 743 generally (1) re-quire that a built-in loss may be taken intoaccount only by the contributing partnerand not other partners, and (2) make thebasis adjustment rules mandatory in caseswith a substantial basis reduction or sub-stantial built-in loss. Thus, the statutorychanges to §§ 704, 734 and 743 underAJCA prevent taxpayers from shifting abuilt-in loss from a tax indifferent party

March 24, 2008 645 2008–12 I.R.B.

to a U.S. taxpayer through the use of apartnership. The Service and TreasuryDepartment have learned that a variationof the distressed asset transaction usinga trust is being promoted in an attemptto avoid these revisions made by AJCA.Consequently, this notices identifies theDAT variation of the transaction as a listedtransaction under § 1.6011–4(b)(2) fortransactions that are entered into after Oc-tober 22, 2004.

FACTS

In a DAT transaction, a tax indiffer-ent party creates a trust (Main-Trust) withX as trustee. The tax indifferent partycontributes distressed assets directly or in-directly (through a partnership or other-wise) to Main-Trust, and is described asthe grantor and beneficiary of Main-Trust.

A U.S. taxpayer (Taxpayer) transferscash or a note to Main-Trust in exchangefor certificates evidencing units of bene-ficial interest in Main-Trust. The cash ornote approximately equals the fair marketvalue of the distressed assets. Under theterms of the Main-Trust agreement, Tax-payer thereby becomes a beneficiary ofMain-Trust.

The parties contend that Main-Trust isa trust for tax purposes with the statedpurpose of preserving and protecting as-sets. Thus, the parties contend that Main-Trust is to be taxed as a trust under the In-ternal Revenue Code, and not as a busi-ness entity described in § 301.7701–2 ofthe Procedure and Administration Regu-lations. As a result, the parties contendthat under § 1015(b), Main-Trust’s basisin the distressed assets is the same as thegrantor’s basis in the distressed assets (inthis case, the tax indifferent party’s basis).

Under the Main-Trust agreement, X,the trustee, is permitted to establish oneor more sub-trusts of Main-Trust, each fora separate beneficiary of Main-Trust whowill then be the sole beneficiary of thatsub-trust. The Main-Trust agreement fur-ther provides that each sub-trust for a ben-eficiary constitutes a separate and distinctsub-trust of Main-Trust with beneficialinterest certificates issued and separaterecords maintained for each sub-trust.

As permitted under the Main-Trustagreement, the trustee creates a separatesub-trust (Sub-Trust), transfers certificatesevidencing units of beneficial interest in

Sub-Trust (Sub-Trust Certificates) to Tax-payer, and allocates the distressed assets toSub-Trust for the sole benefit of the bene-ficiary of the Sub-Trust. The Main-Trustagreement entitles the holder of Sub-TrustCertificates to various rights includingthe right to direct the trustee to vest theholder’s ratable share of the corpus or theincome of Sub-Trust in the holder. TheTaxpayer contends that the existence ofthese rights causes the Taxpayer to beconsidered the owner of Sub-Trust under§ 678, and that Sub-Trust is a grantor trust.As a result of being treated as the owner ofSub-Trust, the Taxpayer takes into accountthose items of income, deductions, andcredits against tax, which are attributableto Sub-Trust, to the extent that such itemswould be taken into account in comput-ing taxable income or credits against thetax of an individual. Section 671. TheTaxpayer contends that Sub-Trust’s ba-sis in the distressed assets is the same asthe grantor’s basis in the distressed assets(in this case Main-Trust’s basis). Section1015(b). Within a short period of time,the distressed assets held by the Sub-Trustare written off as wholly worthless under§ 166. Alternatively, the distressed assetsare sold, and Taxpayer claims a deductionunder § 165.

DISCUSSION

The transaction described in this noticeattempts to shift built-in losses from a taxindifferent party to a U.S. taxpayer whohas not incurred an economic loss so thatthe U.S. taxpayer may claim a deduction ofthe built-in losses from the distressed as-sets. The built-in loss purportedly trans-ferred to Main-Trust and Sub-Trust andimproperly shifted to the Taxpayer is notan allowable loss for the Taxpayer. TheService may assert one or more argumentsthat may include, but are not limited to, as-serting that the Taxpayer’s transfer of cashor a note to Main-Trust in exchange forcertificates of beneficial interest is a trans-fer of the distressed assets under § 1001;asserting that Main-Trust does not meetthe trust requirements of § 301.7701–4;asserting that Main-Trust is not a taxabletrust; asserting that one or more of theentities is properly classified for Federaltax purposes as a partnership subject to§§ 704(c)(1)(C), 734(b) and 743; assertingthat the claimed loss deduction under § 165

was not incurred in a transaction under-taken for profit; asserting the judicial doc-trines, including substance over form, lackof economic substance, and step transac-tion; and asserting that, in the case of dis-tressed debt, the distressed debt was worth-less under § 166 at the time of contributionto Main-Trust and Sub-Trust.

Transactions that are the same as, orsubstantially similar to, the transactiondescribed in this notice that are enteredinto after October 22, 2004, are identi-fied as “listed transactions” for purposesof § 1.6011–4(b)(2) and §§ 6111 and6112 effective February 27, 2008, thedate this notice was released to the pub-lic. Independent of their classificationas listed transactions, transactions thatare the same as, or substantially simi-lar to, the transaction described in thisnotice may already be subject to the re-quirements of § 6011, § 6111, § 6112, orthe regulations thereunder. However, thevariations of this transaction described inthe Coordinated Issue Paper, “DistressedAsset/Debt Coordinated Issue Paper,”LMSB–04–0407–031 (Apr. 18, 2007),that are subject to the AJCA changes to§§ 704, 734 and 743 are not being identi-fied as “listed transactions” for purposesof this notice, § 1.6011–4(b)(2), § 6111and § 6112.

Persons required to disclose these trans-actions under § 1.6011–4 who fail to doso may be subject to the penalty under§ 6707A, which applies to returns andstatements due after October 22, 2004.Persons required to disclose these transac-tions under § 1.6011–4 who fail to do somay be subject to an extended period oflimitations under § 6501(c)(10). Personsrequired to disclose these transactions un-der § 6111 who fail to do so may be subjectto the penalty under § 6707(a). Personsrequired to maintain lists of investors un-der § 6112 who fail to do so (or who failto provide such lists when requested bythe Service) may be subject to the penaltyunder § 6708(a). In addition, the Servicemay impose other penalties on personsinvolved in these transactions or substan-tially similar transactions, including theaccuracy-related penalty under § 6662 or§ 6662A.

A person that is a tax-exempt en-tity within the meaning of § 4965(c), oran entity manager within the meaningof § 4965(d), may be subject to excise

2008–12 I.R.B. 646 March 24, 2008

tax, disclosure, filing or payment obliga-tions under § 4965, § 6033(a)(2), § 6011,and § 6071. Some taxable entities maybe subject to disclosure obligations un-der § 6011(g), that apply to “prohibitedtax shelter transactions” as defined by§ 4965(e) (including listed transactions).

The Service and Treasury recognizethat some taxpayers may have filed taxreturns taking the position that they wereentitled to the purported tax benefits ofthe type of transaction described in thisnotice. These taxpayers should take ap-propriate corrective action and ensure thattheir transactions are disclosed properly.


The principal author of this notice isEric Ingala of the Office of Associate ChiefCounsel (Passthroughs and Special Indus-tries). For further information regardingthis notice, contact Mr. Ingala at (202)622–3070 (not a toll-free call).

Amplification of Notice2006–27 Certification ofEnergy Efficient Home Credit

Notice 2008–35

SECTION 1. PURPOSE

This notice clarifies and supersedes No-tice 2006–27, 2006–1 C.B. 626, as updatedby Announcement 2006–88, 2006–2 C.B.910. Notice 2006–27, as updated, pro-vided guidance regarding the calculationof heating and cooling energy consump-tion for purposes of determining the eligi-bility of a dwelling unit (other than a man-ufactured home) for the New Energy Effi-cient Home Credit under Internal RevenueCode § 45L. Notice 2006–27 also providedguidance relating to the public list of soft-ware programs that may be used to calcu-late energy consumption. Guidance relat-ing to manufactured homes is provided inNotice 2008–36.

This notice supersedes Notice 2006–27by substantially republishing the guidancecontained in that publication. This noticeclarifies the meaning of the terms equiva-lent rating network and eligible contractor,and permits calculation procedures otherthan those identified in Notice 2006–27 tobe used to calculate energy consumption.

Finally, this notice clarifies the processfor removing software from the list of ap-proved software and reflects the extensionof the tax credit through December 31,2008.


.01 In General. Section 45L providesa credit to an eligible contractor who con-structs a qualified energy efficient home.For qualified energy efficient homes (otherthan manufactured homes), the amount ofthe credit is $2,000. A dwelling unit qual-ifies for the credit if—

(1) It is located in the United States;(2) Its construction is substantially

completed after August 8, 2005;(3) It meets the energy saving require-

ments of § 45L(c)(1); and(4) It is acquired from the eligible con-

tractor after December 31, 2005, and be-fore January 1, 2009, for use as a resi-dence.

.02 Energy Saving Requirements. Tomeet the energy saving requirements of§ 45L(c)(1), a dwelling unit must be certi-fied to provide a level of heating and cool-ing energy consumption that is at least 50percent below that of a reference dwellingunit constructed in accordance with thestandards of § 404 of the 2004 Supplementto the 2003 International Energy Conser-vation Code (2004 IECC Supplement),and to have building envelope componentimprovements that provide for a level ofheating and cooling energy consumptionthat is at least 10 percent below that of areference dwelling unit.

.03 Calculation Procedures. For pur-poses of section 2.02 of this notice, heat-ing and cooling energy consumption mustbe calculated in accordance with the pro-cedures prescribed in Residential EnergyServices Network (RESNET) PublicationNo. 05–001 (Nov. 17, 2005) or No.06–001 (June 1, 2006) or in accordancewith an equivalent calculation procedure.

.04 Acquired from Eligible Contractor.A qualified energy efficient home is ac-quired from an eligible contractor for useas a residence if the person that constructedthe home sells or leases the home to an-other person for use as a residence. A qual-ified energy efficient home is not acquiredfrom an eligible contractor if the personthat constructed the home retains the homefor use as a residence. For example, a

qualified energy efficient home is acquiredfrom an eligible contractor in the followingsituations:

(1) A person constructs a qualified en-ergy efficient home and then sells the hometo the homeowner.

(2) A person constructs a qualified en-ergy efficient home and then leases thehome to the lessee or tenant.

(3) A person hires a third party contrac-tor to construct a qualified energy efficienthome and then sells the home to the home-owner. (See section 4.01(5) of this noticefor guidance regarding the person treatedas the eligible contractor in this case.)

SECTION 3. CERTIFICATION

An eligible contractor must obtain thecertification required under § 45L(c)(1)with respect to a dwelling unit (other thana manufactured home) from an eligiblecertifier before claiming the energy ef-ficient home credit with respect to thedwelling unit. An eligible contractor isnot required to file the certification withthe return on which the credit is claimed.However, § 1.6001–1(a) of the IncomeTax Regulations requires that taxpayersmaintain such books and records as aresufficient to establish the entitlement to,and amount of, any credit claimed by thetaxpayer. Accordingly, an eligible con-tractor claiming a $2,000 credit under§ 45L should retain the certification aspart of the eligible contractor’s records tosatisfy this requirement. The certificationwill be treated as satisfying the require-ments of § 45L(c)(1) if all constructionhas been performed in a manner consistentwith the design specifications provided tothe eligible certifier and the certificationcontains all of the following:

.01 The name, address, and telephonenumber of the eligible certifier.

.02 The address of the dwelling unit.

.03 A statement by the eligible certifierthat—

(1) The dwelling unit has a projectedlevel of annual heating and cooling en-ergy consumption that is at least 50 per-cent below the annual level of heating andcooling energy consumption of a referencedwelling unit in the same climate zone;

(2) Building envelope component im-provements alone account for a level of an-nual heating and cooling energy consump-tion that is at least 10 percent below the

March 24, 2008 647 2008–12 I.R.B.

annual level of heating and cooling energyconsumption of a reference dwelling unitin the same climate zone; and

(3) Heating and cooling energy con-sumption have been calculated in the man-ner prescribed in section 2.03 of this no-tice.

.04 A statement by the eligible certi-fier that field inspections of the dwellingunit (or of other dwelling units under thesampling protocol described below) per-formed by the eligible certifier duringand after the completion of constructionhave confirmed that all features of thehome affecting such heating and cool-ing energy consumption comply with thedesign specifications provided to the el-igible certifier. With respect to builderswho build at least 85 homes during atwelve-month period or build subdivi-sions with the same floor plan using thesame subcontractors, the eligible certifiermay use the sampling protocol found inthe current ENERGY STAR® for HomesSampling Protocol Guidelines instead ofinspecting all of the homes. The samplingprotocols can be found at the followingweb address: http://www.energystar.gov/index.cfm?c=bldrs_lenders_raters.nh_sampling.

.05 A list identifying—(1) The dwelling unit’s energy efficient

building envelope components and theirrespective energy performance ratings asrequired by § 401.3 of the 2004 IECC Sup-plement; and

(2) The energy efficient heatingand cooling equipment installed in thedwelling unit and the energy efficiencyperformance of such equipment as ratedunder applicable Department of EnergyAppliance Standards test procedures.

.06 Identification of the listed softwareprogram used to calculate energy con-sumption (see section 5 of this notice).

.07 A declaration, applicable to thecertification and any accompanying doc-uments, signed by a person currentlyauthorized to bind the eligible certifier inthese matters, in the following form:

“Under penalties of perjury, I declarethat I have examined this certification,including accompanying documents,and to the best of my knowledge andbelief, the facts presented in support ofthis certification are true, correct, andcomplete.”

SECTION 4. DEFINITIONS

.01 The following definitions apply forpurposes of this notice:

(1) Building envelope components arebasement walls, exterior walls, floor, roof,and any other building element that en-closes conditioned space, including anyboundary between conditioned space andunconditioned space.

(2) A climate zone is a geographicalarea within which all locations have simi-lar long-term climate conditions as definedin Chapter 3 of the 2004 IECC Supple-ment.

(3) A dwelling unit is a single unit pro-viding complete independent living facil-ities for one or more persons, includingpermanent provisions for living, sleeping,eating, cooking, and sanitation, within abuilding that is not more than three storiesabove grade in height.

(4) An eligible certifier is a personthat is not related (within the meaning of§ 45(e)(4)) to the eligible contractor andhas been accredited or otherwise autho-rized by RESNET (or an equivalent ratingnetwork) to use energy performance mea-surement methods approved by RESNET(or the equivalent rating network). An em-ployee or other representative of a utilityor local building regulatory authority qual-ifies as an eligible certifier if the employeeor representative has been accredited orotherwise authorized by RESNET (or anequivalent rating network) to use the ap-proved energy performance measurementmethods.

(5) An eligible contractor is the personthat constructed a qualified energy effi-cient home. A person must own and have abasis in the qualified energy efficient homeduring its construction to qualify as an el-igible contractor with respect to the home.For example, in the situation described insection 2.04(3) of this notice, if the personthat hires the third party contractor to con-struct the home owns and has the basis inthe home during its construction, the per-son that hires the third party contractor isthe eligible contractor and the third partycontractor is not an eligible contractor.

(6) An equivalent calculation procedureis a procedure that produces results com-parable to the results obtained under theprocedures prescribed in Residential En-ergy Services Network (RESNET) Publi-

cation No. 05–001 (Nov. 17, 2005) orNo. 06–001 (June 1, 2006).

(7) An equivalent rating network in-cludes, in a state that has established en-ergy efficiency standards under which adwelling unit is required to achieve a spec-ified aggregate level of heating and cool-ing energy consumption for any purpose(including compliance with building codesor eligibility for a state grant or tax credit),the state agency administering those stan-dards. Thus, if the agency has accreditedor otherwise authorized a person to useenergy performance measurement meth-ods approved by the agency for use in de-termining whether the state’s energy effi-ciency standards are satisfied, the personso accredited or authorized qualifies as aneligible certifier.

(8) A manufactured home is a dwellingunit constructed in accordance with theFederal Manufactured Home Constructionand Safety Standards (24 C.F.R. 3280).

(9) A qualified energy efficient home isa dwelling unit that qualifies for the creditunder § 45L. See section 2.01 of this noticefor the requirements that a dwelling unitmust satisfy to qualify for the credit.

(10) A reference dwelling unit is adwelling unit that is similar in technicalspecifications and design to the dwellingunit constructed by the eligible contractorexcept that—

(a) The reference dwelling unit is con-structed in accordance with the minimumstandards of Chapter 4 of the 2004 IECCSupplement;

(b) The reference dwelling unit’s airconditioners have a Seasonal Energy Ef-ficiency Ratio (SEER) of 13, measured inaccordance with 10 C.F.R. 430.23(m); and

(c) The reference dwelling unit’s heatpumps have a SEER of 13 and a Heat-ing Seasonal Performance Factor (HSPF)of 7.7, measured in accordance with10 C.F.R. 430.23(m).

SECTION 5. SOFTWAREPROGRAMS

.01 In General. The Internal RevenueService will create and maintain a pub-lic list of software programs that maybe used to calculate energy consumptionfor purposes of providing a certifica-tion under section 3 of this notice. Thislist of approved software may be found

2008–12 I.R.B. 648 March 24, 2008

at: http://www.irs.gov/businesses/small/industries/article/0,,id=155445,00.html.

.02 Requirements for Software Pro-grams To Be Included on the InternalRevenue Service List. A software programwill be included on the list created by theInternal Revenue Service if the softwaredeveloper submits the following informa-tion to the Service and RESNET:

(1) The name, address, and telephonenumber of the software developer,

(2) The name or other identifier of theprogram as it will appear on the list,

(3) The test results, test runs, and thesoftware program with which the test wasconducted, and

(4) A declaration by the developer ofthe software program, made under penal-ties of perjury, that the software program—

(i) Has satisfied all tests required toconform to the software accreditationprocess prescribed in Residential EnergyServices Network (RESNET) Publica-tion No. 05–001 (Nov. 17, 2005) orNo. 06–001 (June 1, 2006); or

(ii) Has satisfied all tests necessary topermit a determination that the softwareprogram is sufficiently accurate to justifyits use in calculating energy consumptionfor purposes of providing a certificationunder section 3 of this notice.

.03 Addresses. Submissions under thissection must be addressed as follows:

Submissions to the Service submittedby U.S. mail:

Internal Revenue ServiceAttn: Program AdministratorCC:PSI:6, Room 5114

P.O. Box 7604Ben Franklin StationWashington, DC 20044

Submissions to the Service submittedby a private delivery service:

Internal Revenue ServiceAttn: Program AdministratorCC:PSI:6, Room 51141111 Constitution Ave., N.W.Washington, DC 20224

Submissions to RESNET:

Residential Energy Services NetworkP.O. Box 4561Oceanside, CA 92052–4561

.04 Original and Updated Lists. A soft-ware program was included on the origi-nal list if the software developer’s submis-sion was received before March 1, 2006.The list will be updated as necessary to re-flect additions resulting from submissionsreceived after February 28, 2006, and dele-tions resulting from removal of softwarefrom the list under section 5.05 of this no-tice.

.05 Removal from Published List. TheService may, upon examination (and afterappropriate consultation with the Depart-ment of Energy), determine that a softwareprogram is not sufficiently accurate to jus-tify its use in calculating energy consump-tion for purposes of providing a certifica-tion under section 3 of this notice and re-move the software program from the pub-lished list. The Service may undertake anexamination on its own initiative or in re-sponse to a public request supported byappropriate analysis of the software pro-gram’s deficiencies.

.06 Effect of Removal from PublishedList. A software program may not be usedto calculate energy consumption for pur-poses of providing a certification that sat-isfies the requirements of § 45L after theeffective date of removal of the softwarefrom the published list. The removal willnot affect the validity of any certificationprovided with respect to a dwelling uniton or before the effective date of removalfrom the published list. Generally, noticethat software is being removed from thepublished list will be provided at the sitespecified in section 5.01 of this notice atleast sixty (60) days before the effectivedate of the removal.

.07 Public Availability of Information.RESNET may make available for publicreview any information provided to it un-der section 5.02 of this notice.


The collections of information con-tained in this notice have been reviewedand approved by the Office of Manage-ment and Budget in accordance with thePaperwork Reduction Act (44 U.S.C.3507) under control number 1545–1995.

An agency may not conduct or sponsor,and a person is not required to respondto, a collection of information unless the

collection of information displays a validOMB control number.

The collections of information in thisnotice are in sections 3 and 5. This in-formation is required to be collected andretained in order to ensure that a dwellingunit (other than a manufactured home)meets the requirements for the energyefficient home credit under § 45L. Thisinformation will be used to determinewhether property for which certificationsare provided is property that qualifies forthe credit. The collection of information isrequired to obtain a benefit. The likely re-spondents are corporations, partnerships,and individuals.


The estimated annual burden per re-spondent varies from 2.5 hours to 4 hours,depending on individual circumstances,with an estimated average burden of 3hours to complete the certification re-quired under this notice. The estimatednumber of respondents is 45.


Books or records relating to a collectionof information must be retained as longas their contents may become material inthe administration of any Internal Revenuelaw. Generally, tax returns and tax returninformation are confidential, as requiredby 26 U.S.C. 6103.

SECTION 7. EFFECT ON OTHERDOCUMENTS

Notice 2006–27, as updated by An-nouncement 2006–88, is clarified andsuperseded. Announcement 2006–88 isalso clarified and superseded.

SECTION 8. EFFECTIVE DATE

This notice applies with respect to certi-fications provided after February 29, 2008.Taxpayers may apply the provisions of thisnotice with respect to certifications pro-vided on or before February 29, 2008.


The principal author of this noticeis Jennifer Bernardini of the Office ofAssociate Chief Counsel (Passthroughs& Special Industries). For further in-formation regarding this notice, contact

March 24, 2008 649 2008–12 I.R.B.

Jennifer Bernardini at (202) 622–3110(not a toll-free call).

Amplification of Notice2006–28 Energy EfficientHome Credit; ManufacturedHomes

Notice 2008–36

SECTION 1. PURPOSE

This notice clarifies and supersedes No-tice 2006–28, 2006–1 C.B. 628, as updatedby Announcement 2006–88, 2006–2 C.B.910. Notice 2006–28, as updated, pro-vided guidance regarding the calculationof heating and cooling energy consump-tion for purposes of determining the eli-gibility of a manufactured home for theNew Energy Efficient Home Credit un-der Internal Revenue Code § 45L. No-tice 2006–28 also provided guidance relat-ing to the public list of software programsthat may be used to calculate energy con-sumption. Guidance relating to dwellingunits other than manufactured homes isprovided in Notice 2008–35.

This notice supersedes Notice 2006–28by substantially republishing the guidancecontained in that publication. This noticeclarifies the meaning of the terms equiva-lent rating network and eligible contractor,and permits calculation procedures otherthan those identified in Notice 2006–28 tobe used to calculate energy consumption.Finally, this notice clarifies the processfor removing software from the list of ap-proved software and reflects the extensionof the tax credit through December 31,2008.


.01 In General. Section 45L providesa credit to an eligible contractor who con-structs a qualified energy efficient home.For qualified energy efficient homes thatare manufactured homes, the amount of thecredit is $1,000 or $2,000, depending onthe energy savings that are achieved. Amanufactured home qualifies for the creditif:

(1) It is located in the United States;(2) Its construction is substantially

completed after August 8, 2005;

(3) It meets the energy saving require-ments of § 45L(c)(2) or (3); and

(4) It is acquired, directly or indirectly,from the eligible contractor after Decem-ber 31, 2005, and before January 1, 2009,for use as a residence.

.02 Energy Saving Requirements. Tomeet the energy saving requirements of§ 45L(c)(2) or (3), a manufactured homemust meet one of the following standards:

(1) To meet the energy saving require-ments of § 45L(c)(2) and qualify for the$2,000 credit, a manufactured home mustbe certified to provide a level of heatingand cooling energy consumption that is atleast 50 percent below that of a referencedwelling unit constructed in accordancewith the standards of § 404 of the 2004Supplement to the 2003 International En-ergy Conservation Code (2004 IECC Sup-plement), and to have building envelopecomponent improvements that provide fora level of heating and cooling energy con-sumption that is at least 10 percent belowthat of a reference dwelling unit (see sec-tion 3 of this notice).

(2) To meet the energy saving require-ments of § 45L(c)(3) and qualify for the$1,000 credit, a manufactured home musteither—

(a) be certified to provide a level ofheating and cooling energy consumptionthat is at least 30 percent below that ofa reference dwelling unit constructed inaccordance with the standards of § 404 ofthe 2004 IECC Supplement, and to havebuilding envelope component improve-ments that provide for a level of heatingand cooling energy consumption that is atleast 10 percent below that of a referencedwelling unit; or

(b) meet the current requirements estab-lished by the Administrator of the Environ-mental Protection Agency under the EN-ERGY STAR® Labeled Homes Programin effect on the date construction is sub-stantially completed (see section 4 of thisnotice).

.03 Calculation Procedures. For pur-poses of section 2.02 of this notice, heat-ing and cooling energy consumption mustbe calculated in accordance with the pro-cedures prescribed in Residential EnergyServices Network (RESNET) PublicationNo. 05–001 (Nov. 17, 2005) or No.06–001 (June 1, 2006) or in accordancewith an equivalent calculation procedure.

.04 Acquired from Eligible Contractor.A qualified energy efficient manufacturedhome is acquired directly from an eligiblecontractor for use as a residence if the per-son that produced the manufactured homesells or leases the manufactured home toanother person for use as a residence. Aqualified energy efficient manufacturedhome is acquired indirectly from an eli-gible contractor for use as a residence ifthe person that produced the manufacturedhome sells the manufactured home to anintermediary and the intermediary (or thelast of multiple intermediaries) sells orleases the manufactured home to anotherperson for use as a residence. A qualifiedenergy efficient manufactured home is notacquired from an eligible contractor if theperson that produced the manufacturedhome retains the manufactured home foruse as a residence. For example, a quali-fied energy efficient manufactured homeis acquired from an eligible contractor inthe following situations:

(1) A person produces a qualified en-ergy efficient manufactured home and thensells the manufactured home to the home-owner.

(2) A person produces a qualified en-ergy efficient manufactured home and thenleases the manufactured home to the lesseeor tenant.

(3) A person hires a third party con-tractor to produce a qualified energy ef-ficient manufactured home and then sellsthe manufactured home to the homeowner.(See section 5.01(5) of this notice for guid-ance regarding the person treated as the el-igible contractor in this case.)

(4) A person that produces a manufac-tured home sells the home to a dealer ofmanufactured homes and the dealer sellsthe manufactured home to another personfor use as a residence. (See section 7.01 ofthis notice for a rule permitting an eligiblecontractor to rely on a dealer’s statementconcerning a sale by the dealer.)

SECTION 3. REQUIREMENTS TOCLAIM THE $2,000 CREDIT

An eligible contractor must obtain thecertification required under § 45L(c)(2)with respect to a manufactured home froman eligible certifier before claiming the$2,000 energy efficient home credit withrespect to the manufactured home. An el-igible contractor is not required to file the

2008–12 I.R.B. 650 March 24, 2008

certification with the return on which thecredit is claimed. However, § 1.6001–1(a)of the Income Tax Regulations requiresthat taxpayers maintain such books andrecords as are sufficient to establish theentitlement to, and amount of, any creditclaimed by the taxpayer. Accordingly,an eligible contractor claiming a $2,000credit under § 45L should retain the certi-fication as part of the eligible contractor’srecords to satisfy this requirement. Thecertification will be treated as satisfyingthe requirements of § 45L(c)(2) if all con-struction has been performed in a mannerconsistent with the design specificationsprovided to the eligible certifier and thecertification contains all of the following:

.01 The name, address, and telephonenumber of the eligible certifier.

.02 The manufactured home’s serial orother identification number.

.03 A statement by the eligible certifierthat—

(1) The manufactured home has a pro-jected level of annual heating and coolingenergy consumption that is at least 50 per-cent below the annual level of heating andcooling energy consumption of a referencedwelling unit in the same climate zone;

(2) Building envelope component im-provements alone account for a level of an-nual heating and cooling energy consump-tion that is at least 10 percent below theannual level of heating and cooling energyconsumption of a reference dwelling unitin the same climate zone; and

(3) Heating and cooling energy con-sumption have been calculated in the man-ner prescribed in section 2.03 of this no-tice.

.04 A statement by the eligible certifierthat inspections of the manufactured home(or of other manufactured homes underthe sampling protocol described below)performed by the eligible certifier afterinstallation on the permanent site haveconfirmed that such heating and coolingenergy consumption complies with the de-sign specifications provided to the eligiblecertifier. With respect to manufacturersthat produce at least 85 homes during atwelve-month period, the eligible certifiermay use the sampling protocol found inthe current standards of the ENERGYSTAR® Qualified Manufactured Homes— Design, Manufacturing, Installation,and Certification Procedures, located atthe following web address: http://www.

energystar.gov/index.cfm?c=bldrs_lenders_raters.pt_builder_manufactured.

.05 A list identifying—(1) The manufactured home’s energy

efficient building envelope componentsand their respective energy performancerating as required by § 401.3 of the 2004IECC Supplement; and

(2) The energy efficient heating andcooling equipment installed in the manu-factured home and the energy efficiencyperformance of such equipment as ratedunder applicable Department of EnergyAppliance Standards test procedures.

.06 Identification of the listed softwareprogram used to calculate energy con-sumption (see section 6 of this notice).

.07 A declaration, applicable to thecertification and any accompanying doc-uments, signed by a person currentlyauthorized to bind the eligible certifier inthese matters, in the following form:

“Under penalties of perjury, I declarethat I have examined this certification,including accompanying documents,and to the best of my knowledge andbelief, the facts presented in support ofthis certification are true, correct, andcomplete.”

SECTION 4. REQUIREMENTS TOCLAIM THE $1,000 CREDIT

.01 Certified Homes. Except as pro-vided in section 4.02 of this notice, an el-igible contractor must obtain the certifica-tion required under § 45L(c)(3)(A) with re-spect to a manufactured home from an el-igible certifier before claiming the $1,000energy efficient home credit with respectto the manufactured home. An eligiblecontractor is not required to attach the cer-tification to the return on which the creditis claimed. However, § 1.6001–1(a) re-quires that taxpayers maintain such booksand records as are sufficient to establish theentitlement to, and amount of, any creditclaimed by the taxpayer. Accordingly, aneligible contractor claiming a $1,000 creditunder § 45L should retain the certificationas part of the eligible contractor’s recordsto satisfy this requirement. The certifica-tion will be treated as satisfying the re-quirements of § 45L(c)(3)(A) if all con-struction has been performed in a mannerconsistent with the design specificationsprovided to the eligible certifier and thecertification contains all of the following:

(1) The name, address, and telephonenumber of the eligible certifier.

(2) The manufactured home’s serial orother identification number.

(3) A statement by the eligible certifierthat—

(a) The manufactured home has a pro-jected level of annual heating and coolingenergy consumption that is at least 30 per-cent below the annual level of heating andcooling energy consumption of a referencedwelling unit in the same climate zone;

(b) Building envelope component im-provements alone account for a level of an-nual heating and cooling energy consump-tion that is at least 10 percent below theannual level of heating and cooling energyconsumption of a reference dwelling unitin the same climate zone; and

(c) Heating and cooling energy con-sumption have been calculated in the man-ner prescribed in section 2.03 of this no-tice.

(4) A statement by the eligible certifierthat field inspections of the manufacturedhome (or of other manufactured homesunder the sampling protocol describedbelow) performed by the eligible certi-fier after installation on the permanentsite have confirmed that such heating andcooling energy consumption complieswith the design specifications provided tothe eligible certifier. With respect to man-ufacturers that produce at least 85 homesduring a twelve-month period, the certifiermay use the sampling protocol found inthe current standards of the current EN-ERGY STAR® Qualified ManufacturedHomes: Guide for Retailers, located atthe following web address: http://www.energystar.gov/index.cfm?c=bldrs_lenders_raters.pt_builder_manufactured.

(5) A list identifying—(a) The manufactured home’s energy

efficient building envelope componentsand their respective energy performancerating as required by § 401.3 of the 2004IECC Supplement; and

(b) The energy efficient heating andcooling equipment installed in the manu-factured home and the energy efficiencyperformance of such equipment as ratedunder applicable Department of EnergyAppliance Standards test procedures.

(6) Identification of the listed softwareprogram used to calculate energy con-sumption (see section 6 of this notice).

March 24, 2008 651 2008–12 I.R.B.

(7) A declaration, applicable to thecertification and any accompanying doc-uments, signed by a person currentlyauthorized to bind the eligible certifier inthese matters, in the following form:

“Under penalties of perjury, I declarethat I have examined this certification,including accompanying documents,and to the best of my knowledge andbelief, the facts presented in support ofthis certification are true, correct, andcomplete.”.02 Energy Star Homes. An eligible

contractor may claim the $1,000 energy ef-ficient home credit with respect to a man-ufactured home by meeting the applica-ble certification requirements establishedby the Administrator of the Environmen-tal Protection Agency under the ENERGYSTAR® Labeled Homes Program in effecton the date construction is substantiallycompleted.

SECTION 5. DEFINITIONS

.01 The following definitions apply forpurposes of this notice:

(1) Building envelope components arebasement walls, exterior walls, floor, roof,and any other building element that en-closes conditioned space, including anyboundary between conditioned space andunconditioned space.

(2) A climate zone is a geographicalarea within which all locations have simi-lar long-term climate conditions as definedin Chapter 3 of the 2004 IECC Supple-ment.

(3) A dwelling unit is a single unit pro-viding complete independent living facil-ities for one or more persons, includingpermanent provisions for living, sleeping,eating, cooking, and sanitation, within abuilding that is not more than three storiesabove grade in height.

(4) An eligible certifier is a personthat is not related (within the meaning of§ 45(e)(4)) to the eligible contractor andhas been accredited or otherwise autho-rized by RESNET (or an equivalent ratingnetwork) to use energy performance mea-surement methods approved by RESNET(or the equivalent rating network). An em-ployee or other representative of a utilityor local building regulatory authority qual-ifies as an eligible certifier if the employeeor representative has been accredited orotherwise authorized by RESNET (or an

equivalent rating network) to use the ap-proved energy performance measurementmethods.

(5) An eligible contractor, in the caseof a qualified energy efficient home thatis a manufactured home, is the person thatproduced the manufactured home. A per-son must own and have a basis in the qual-ified energy efficient manufactured homeduring its production to qualify as an eligi-ble contractor with respect to the manufac-tured home. For example, in the situationdescribed in section 2.04(3) of this notice,if the person that hires the third party con-tractor to produce the manufactured homeowns and has the basis in the home duringits construction, the person that hires thethird party contractor is the eligible con-tractor and the third party contractor is notan eligible contractor.

(6) An equivalent calculation procedureis a procedure that produces results com-parable to the results obtained under theprocedures prescribed in Residential En-ergy Services Network (RESNET) Publi-cation No. 05–001 (Nov. 17, 2005) orNo. 06–001 (June 1, 2006).

(7) An equivalent rating network in-cludes, in a state that has established en-ergy efficiency standards under which adwelling unit is required to achieve a spec-ified aggregate level of heating and cool-ing energy consumption for any purpose(including compliance with building codesor eligibility for a state grant or tax credit),the state agency administering those stan-dards. Thus, if the agency has accreditedor otherwise authorized a person to useenergy performance measurement meth-ods approved by the agency for use in de-termining whether the state’s energy effi-ciency standards are satisfied, the personso accredited or authorized qualifies as aneligible certifier.

(8) A manufactured home is a dwellingunit constructed in accordance with theFederal Manufactured Home Constructionand Safety Standards (24 C.F.R. 3280).

(9) A qualified energy efficient manu-factured home is a dwelling unit that qual-ifies for the credit under section 45L. Seesection 2.01 of this notice for the require-ments that a dwelling unit must satisfy toqualify for the credit.

(10) A reference dwelling unit is adwelling unit that is similar in technicalspecifications and design to the manu-

factured home produced by the eligiblecontractor except that—

(a) The reference dwelling unit is con-structed in accordance with the minimumstandards of Chapter 4 of the 2004 IECCSupplement;

(b) The reference dwelling unit’s airconditioners have a Seasonal Energy Ef-ficiency Ratio (SEER) of 13, measured inaccordance with 10 C.F.R. 430.23(m); and

(c) The reference dwelling unit’s heatpumps have a SEER of 13 and a Heat-ing Seasonal Performance Factor (HSPF)of 7.7, measured in accordance with10 C.F.R. 430.23(m).

SECTION 6. SOFTWAREPROGRAMS

.01 In General. The Internal RevenueService will create and maintain a pub-lic list of software programs that may beused to calculate energy consumption forpurposes of providing certifications un-der sections 3 and 4 of this notice. Thislist of approved software may be foundat: http://www.irs.gov/businesses/small/industries/article/0,,id=155445,00.html.

.02 Requirements for Software Pro-grams To Be Included on the InternalRevenue Service List. A software programwill be included on the list created by theInternal Revenue Service if the softwaredeveloper submits the following informa-tion to the Service and RESNET:

(1) The name, address, and telephonenumber of the software developer;

(2) The name or other identifier of theprogram as it will appear on the list;

(3) The test results, test runs, and thesoftware program with which the test wasconducted; and

(4) A declaration by the developer ofthe software program, made under penal-ties of perjury, that the software program—

(i) Has satisfied all tests required toconform to the software accreditationprocess prescribed in Residential EnergyServices Network (RESNET) Publica-tion No. 05–001 (Nov. 17, 2005) orNo. 06–001 (June 1, 2006); or

(ii) Has satisfied all tests necessary topermit a determination that the softwareprogram is sufficiently accurate to justifyits use in calculating energy consumptionfor purposes of providing certifications un-der sections 3 and 4 of this notice.

2008–12 I.R.B. 652 March 24, 2008

.03 Addresses. Submissions under thissection must be addressed as follows:

Submissions to the Service submittedby U.S. mail:

Internal Revenue ServiceAttn: Program AdministratorCC:PSI:6, Room 5114P.O. Box 7604Ben Franklin StationWashington, DC 20044

Submissions to the Service submittedby a private delivery service:

Internal Revenue ServiceAttn: Program AdministratorCC:PSI:6, Room 51141111 Constitution Ave., N.W.Washington, DC 20224

Submissions to RESNET:

Residential Energy Services NetworkP.O. Box 4561Oceanside, CA 92052–4561

.04 Original and Updated Lists. A soft-ware program was included on the origi-nal list if the software developer’s submis-sion was received before March 1, 2006.The list will be updated as necessary to re-flect additions resulting from submissionsreceived after February 28, 2006, and dele-tions resulting from removal of softwarefrom the list under section 6.05 of this no-tice.

.05 Removal from Published List. TheService may, upon examination (and afterappropriate consultation with the Depart-ment of Energy), determine that a softwareprogram is not sufficiently accurate to jus-tify its use in calculating energy consump-tion for purposes of providing a certifica-tion under sections 3 and 4 of this noticeand remove the software program from thepublished list. The Service may undertakean examination on its own initiative or inresponse to a public request supported byappropriate analysis of the software pro-gram’s deficiencies.

.06 Effect of Removal from PublishedList. A software program may not be usedto calculate energy consumption for pur-poses of providing a certification that sat-isfies the requirements of § 45L after theeffective date of removal of the softwarefrom the published list. The removal will

not affect the validity of any certificationprovided with respect to a manufacturedhome on or before the effective date of re-moval from the published list. Generally,notice that software is being removed fromthe published list will be provided at thesite specified in section 6.01 of this noticeat least sixty (60) days before the effectivedate of the removal.

.07 Public Availability of Information.RESNET may make available for publicreview any information provided to it un-der section 6.02 of this notice.

SECTION 7. SALES TO DEALERS

.01 In General. In the case of a manu-factured home sold by an eligible contrac-tor to a dealer of manufactured homes, theeligible contractor may rely on a statementby the dealer to establish the date on whicha manufactured home is acquired, that it islocated in the United States, and that it isacquired for use as a residence. An eligiblecontractor is not required to file the state-ment with the return on which the creditis claimed. However, § 1.6001–1(a) of theIncome Tax Regulations requires that tax-payers maintain such books and recordsas are sufficient to establish the entitle-ment to, and amount of, any credit claimedby the taxpayer. Accordingly, an eligiblecontractor claiming a credit under § 45Lshould retain the statement as part of itsrecords to satisfy this requirement, and isnot entitled to rely on the statement unlessthe statement is so retained.

.02 Content of Statement. The eligiblecontractor may not rely on the statementby the dealer unless the statement specifiesthe date of the retail sale of the manufac-tured home, that the dealer delivered themanufactured home to the purchaser at anaddress in the United States, and that thedealer has no knowledge of any informa-tion suggesting that the purchaser will usethe manufactured home other than as a res-idence. The statement must also containthe following information:

(1) The name, address, and telephonenumber of the dealer.

(2) A declaration, applicable to thestatement made by the dealer and anyaccompanying documents, signed by aperson currently authorized to bind thedealer in such matters, in the followingform:

“Under penalties of perjury, I declarethat, to the best of my knowledge andbelief, the facts presented with respectto this sale transaction are true, correct,and complete.”


The collections of information con-tained in this notice have been reviewedand approved by the Office of Manage-ment and Budget in accordance with thePaperwork Reduction Act (44 U.S.C.3507) under control number 1545–1994.

An agency may not conduct or sponsor,and a person is not required to respondto, a collection of information unless thecollection of information displays a validOMB control number.

The collections of information in thisnotice are in sections 3, 4, 6, and 7. Thisinformation is required to be collected andretained in order to ensure that a manufac-tured home meets the requirements for theenergy efficient home credit under § 45L.This information will be used to determinewhether property for which certificationsare provided is property that qualifies forthe credit. The collection of information isrequired to obtain a benefit. The likely re-spondents are corporations, partnerships,and individuals.


The estimated annual burden per re-spondent varies from 3.5 hours to 5 hours,depending on individual circumstances,with an estimated average burden of4 hours to complete the certificationrequired under this notice. The estimatednumber of respondents is 15.


Books or records relating to a collectionof information must be retained as longas their contents may become material inthe administration of any Internal Revenuelaw. Generally, tax returns and tax returninformation are confidential, as requiredby 26 U.S.C. 6103.


Notice 2006–28, as updated by An-nouncement 2006–88, is clarified and

March 24, 2008 653 2008–12 I.R.B.

superseded. Announcement 2006–88 isalso clarified and superseded.


This notice applies with respect to certi-fications provided after February 29, 2008.Taxpayers may apply the provisions of thisnotice with respect to certifications pro-vided on or before February 29, 2008.


The principal author of this noticeis Jennifer Bernardini of the Office ofAssociate Chief Counsel (Passthroughs& Special Industries). For further in-formation regarding this notice, contactJennifer Bernardini at (202) 622–3110(not a toll-free call).

Update for Weighted AverageInterest Rates, Yield Curves,and Segment Rates

Notice 2008–37

This notice provides guidance as to thecorporate bond weighted average interest

rate and the permissible range of interestrates specified under § 412(b)(5)(B)(ii)(II)of the Internal Revenue Code as in ef-fect for plan years beginning before 2008.It also provides guidance on the corpo-rate bond monthly yield curve (and thecorresponding spot segment rates), the24-month average segment rates, andthe funding transitional segment ratesunder § 430(h)(2). In addition, this no-tice provides guidance as to the interestrate on 30-year Treasury securities under§ 417(e)(3)(A)(ii)(II) as in effect for planyears beginning before 2008, and the min-imum present value segment rates under§ 417(e)(3)(D) as in effect for plan yearsbeginning after 2007.

CORPORATE BOND WEIGHTEDAVERAGE INTEREST RATE

Sections 412(b)(5)(B)(ii) and 412(l)(7)(C)(i), as amended by the Pension FundingEquity Act of 2004 and by the PensionProtection Act of 2006 (PPA), providethat the interest rates used to calculatecurrent liability and to determine therequired contribution under § 412(l) forplan years beginning 2007 must be withina permissible range based on the weighted

average of the rates of interest on amountsinvested conservatively in long terminvestment grade corporate bonds duringthe 4-year period ending on the last daybefore the beginning of the plan year.

Notice 2004–34, 2004–1 C.B. 848, pro-vides guidelines for determining the cor-porate bond weighted average interest rateand the resulting permissible range of in-terest rates used to calculate current liabil-ity. That notice establishes that the corpo-rate bond weighted average is based on themonthly composite corporate bond rate de-rived from designated corporate bond in-dices. The methodology for determiningthe monthly composite corporate bond rateas set forth in Notice 2004–34 continues toapply in determining that rate. See Notice2006–75, 2006–2 C.B. 366.

The composite corporate bond rate forFebruary 2008 is 6.36 percent. Pursuantto Notice 2004–34, the Service has de-termined this rate as the average of themonthly yields for the included corporatebond indices for that month.

The following corporate bond weightedaverage interest rate was determined forplan years beginning in the month shownbelow.

For Plan YearsBeginning in Permissible Range

Month Year

CorporateBond Weighted

Average 90% to 100%

March 2008 5.96 5.36 5.96

YIELD CURVE AND SEGMENTRATES

Generally for plan years beginningafter 2007 (except for delayed effectivedates for certain plans under sections 104,105, and 106 of PPA), § 430 of the Codespecifies the minimum funding require-ments that apply to single employer planspursuant to § 412. Section 430(h)(2) spec-ifies the interest rates that must be usedto determine a plan’s target normal costand funding target. Under this provision,present value is generally determined us-ing three 24-month average interest rates

(“segment rates”), each of which appliesto cash flows during specified periods.However, an election may be made under§ 430(h)(2)(D)(ii) to use the monthly yieldcurve in place of the segment rates. Forplan years beginning in 2008 and 2009, atransitional rule under § 430(h)(2)(G) pro-vides that the segment rates are blendedwith the corporate bond weighted averageas specified above. An election may bemade under § 430(h)(2)(G)(iv) to use thesegment rates without applying the transi-tional rule.

Notice 2007–81, 2007–44 I.R.B. 899,provides guidelines for determining the

monthly corporate bond yield curve, the24-month average corporate bond seg-ment rates, and the funding transitionalsegment rates used to compute the tar-get normal cost and the funding target.Pursuant to Notice 2007–81, the monthlycorporate bond yield curve derived fromFebruary 2008 data is in Table I at the endof this notice. The spot first, second, andthird segment rates for the month of Feb-ruary 2008 are, respectively, 4.11, 6.18,and 7.05. The three 24-month averagecorporate bond segment rates applica-ble for March 2008 under the election of§ 430(h)(2)(G)(iv) are as follows:

FirstSegment

SecondSegment

ThirdSegment

5.24 5.97 6.49

2008–12 I.R.B. 654 March 24, 2008

The transitional segment rates under§ 430(h)(2)(G) applicable for March 2008,taking into account the corporate bond

weighted average of 5.96 stated above, areas follows:

For Plan YearsBeginning in

FirstSegment

SecondSegment

ThirdSegment

2008 5.72 5.96 6.14

30-YEAR TREASURY SECURITIESINTEREST RATES

Section 417(e)(3)(A)(ii)(II) (prior toamendment by PPA) defines the appli-cable interest rate, which must be usedfor purposes of determining the minimumpresent value of a participant’s benefitunder § 417(e)(1) and (2), as the annualrate of interest on 30-year Treasury se-curities for the month before the dateof distribution or such other time as theSecretary may by regulations prescribe.Section 1.417(e)–1(d)(3) of the IncomeTax Regulations provides that the applica-ble interest rate for a month is the annualrate of interest on 30-year Treasury secu-rities as specified by the Commissioner

for that month in revenue rulings, noticesor other guidance published in the InternalRevenue Bulletin.

The rate of interest on 30-year Trea-sury securities for February 2008 is 4.52percent. The Service has determined thisrate as the average of the yield on the30-year Treasury bond maturing in May2037 determined each day through Febru-ary 6, 2007, and the yield on the 30-yearTreasury bond maturing in February 2038determined each day for the balance of themonth.

Generally for plan years beginning after2007, § 431 specifies the minimum fund-ing requirements that apply to multiem-ployer plans pursuant to § 412. Section431(c)(6)(B) specifies a minimum amount

for the full-funding limitation described in§ 431(c)(6)(A), based on the plan’s currentliability. Section 431(c)(6)(E)(ii)(I) pro-vides that the interest rate used to calculatecurrent liability for this purpose must beno more than 5 percent above and no morethan 10 percent below the weighted aver-age of the rates of interest on 30-year Trea-sury securities during the four-year periodending on the last day before the beginningof the plan year. Notice 88–73, 1988–2C.B. 383, provides guidelines for deter-mining the weighted average interest rate.The following rates were determined forplan years beginning in the months shownbelow.

For Plan YearsBeginning in Permissible Range

Month Year

30-YearTreasuryWeightedAverage 90% to 105%

January 2008 4.81 4.33 5.06February 2008 4.80 4.32 5.04

March 2008 4.79 4.31 5.03

MINIMUM PRESENT VALUESEGMENT RATES

Generally for plan years beginning af-ter December 31, 2007, the applicable in-terest rates under § 417(e)(3)(D) are seg-ment rates computed without regard to a

24-month average. For plan years begin-ning in 2008 through 2011, the applica-ble interest rate is the monthly spot seg-ment rate blended with the applicable rateunder § 417(e)(3)(A)(ii)(II) as in effectfor plan years beginning in 2007. Notice2007–81 provides guidelines for determin-

ing the minimum present value segmentrates. Pursuant to that notice, the min-imum present value transitional segmentrates determined for February 2008, tak-ing into account the February 2008 30-yearTreasury rate of 4.52 stated above, are asfollows:

For Plan YearsBeginning in

FirstSegment

SecondSegment

ThirdSegment

2008 4.44 4.85 5.03


The principal author of this notice isTony Montanaro of the Employee Plans,

Tax Exempt and Government Entities Di-vision. Mr. Montanaro may be e-mailed [email protected].

March 24, 2008 655 2008–12 I.R.B.

Table I

Monthly Yield Curve for February 2008

Maturity Yield Maturity Yield Maturity Yield Maturity Yield Maturity Yield

0.5 3.37 20.5 6.76 40.5 7.09 60.5 7.20 80.5 7.26

1.0 3.51 21.0 6.78 41.0 7.09 61.0 7.20 81.0 7.26

1.5 3.66 21.5 6.79 41.5 7.10 61.5 7.20 81.5 7.26

2.0 3.82 22.0 6.81 42.0 7.10 62.0 7.21 82.0 7.26

2.5 4.00 22.5 6.82 42.5 7.11 62.5 7.21 82.5 7.26

3.0 4.18 23.0 6.83 43.0 7.11 63.0 7.21 83.0 7.26

3.5 4.37 23.5 6.85 43.5 7.11 63.5 7.21 83.5 7.26

4.0 4.55 24.0 6.86 44.0 7.12 64.0 7.21 84.0 7.26

4.5 4.73 24.5 6.87 44.5 7.12 64.5 7.22 84.5 7.27

5.0 4.89 25.0 6.88 45.0 7.12 65.0 7.22 85.0 7.27

5.5 5.04 25.5 6.89 45.5 7.13 65.5 7.22 85.5 7.27

6.0 5.19 26.0 6.90 46.0 7.13 66.0 7.22 86.0 7.27

6.5 5.32 26.5 6.91 46.5 7.13 66.5 7.22 86.5 7.27

7.0 5.44 27.0 6.92 47.0 7.14 67.0 7.22 87.0 7.27

7.5 5.55 27.5 6.93 47.5 7.14 67.5 7.22 87.5 7.27

8.0 5.66 28.0 6.94 48.0 7.14 68.0 7.23 88.0 7.27

8.5 5.76 28.5 6.95 48.5 7.15 68.5 7.23 88.5 7.27

9.0 5.85 29.0 6.96 49.0 7.15 69.0 7.23 89.0 7.27

9.5 5.93 29.5 6.96 49.5 7.15 69.5 7.23 89.5 7.27

10.0 6.01 30.0 6.97 50.0 7.15 70.0 7.23 90.0 7.28

10.5 6.08 30.5 6.98 50.5 7.16 70.5 7.23 90.5 7.28

11.0 6.15 31.0 6.99 51.0 7.16 71.0 7.23 91.0 7.28

11.5 6.21 31.5 6.99 51.5 7.16 71.5 7.24 91.5 7.28

12.0 6.26 32.0 7.00 52.0 7.16 72.0 7.24 92.0 7.28

12.5 6.31 32.5 7.01 52.5 7.17 72.5 7.24 92.5 7.28

13.0 6.36 33.0 7.01 53.0 7.17 73.0 7.24 93.0 7.28

13.5 6.40 33.5 7.02 53.5 7.17 73.5 7.24 93.5 7.28

14.0 6.44 34.0 7.02 54.0 7.17 74.0 7.24 94.0 7.28

14.5 6.48 34.5 7.03 54.5 7.18 74.5 7.24 94.5 7.28

15.0 6.52 35.0 7.04 55.0 7.18 75.0 7.25 95.0 7.28

15.5 6.55 35.5 7.04 55.5 7.18 75.5 7.25 95.5 7.28

16.0 6.58 36.0 7.05 56.0 7.18 76.0 7.25 96.0 7.29

16.5 6.60 36.5 7.05 56.5 7.19 76.5 7.25 96.5 7.29

17.0 6.63 37.0 7.06 57.0 7.19 77.0 7.25 97.0 7.29

17.5 6.65 37.5 7.06 57.5 7.19 77.5 7.25 97.5 7.29

18.0 6.67 38.0 7.07 58.0 7.19 78.0 7.25 98.0 7.29

18.5 6.69 38.5 7.07 58.5 7.19 78.5 7.25 98.5 7.29

19.0 6.71 39.0 7.08 59.0 7.20 79.0 7.25 99.0 7.29

19.5 6.73 39.5 7.08 59.5 7.20 79.5 7.26 99.5 7.29

20.0 6.75 40.0 7.09 60.0 7.20 80.0 7.26 100.0 7.29

2008–12 I.R.B. 656 March 24, 2008

26 CFR 1.6012–1: Individuals required to make re-turns of income.(Also: Part 1, § 1.6017–1.)

Rev. Proc. 2008–21

SECTION 1. PURPOSE

This revenue procedure provides thatthe Internal Revenue Service will not chal-lenge the accuracy of income tax returnsfiled in compliance with Notice 2008–28,2008–10 I.R.B. 546, by eligible individu-als who enter $1.00 in adjusted gross in-come solely for purposes of effectuatingthe electronic filing of the return.


.01 The Economic Stimulus Act of2008 amended section 6428 of the InternalRevenue Code to provide economic stim-ulus payments to eligible individuals. Forthis purpose, an eligible individual is anyindividual other than a nonresident alien,an estate or trust, or an individual whocan be claimed as dependent under sec-tion 151 for the taxable year. See section6428(e)(3). In general, the amount of theeconomic stimulus payment is the lesserof (1) the individual’s net income tax lia-bility, or (2) $600 ($1,200 in the case of ajoint return). See section 6428(a).

.02 As provided in section 6428(b),individuals with at least $3,000 of “qual-ifying income” may receive a minimumpayment of $300 ($600 in the case of ajoint return), even though the individualhas no net income tax liability. Qualifyingincome as defined in section 6428(e)(1)means: earned income as defined in sec-tion 32(c)(2) that is includible in grossincome for federal income tax purposes(including, if elected, certain combat zonecompensation of members of the ArmedForces); social security benefits (includingmonthly retirement, survivor and disabil-ity benefits, but not including supple-mental security income (SSI) payments)and Tier I railroad retirement benefits de-scribed in section 86(d); and disabilitycompensation, disability pension and sur-vivors’ benefits from the Department ofVeterans’ Affairs (VA) pursuant to Chap-ters 11, 13, or 15 of Title 38 of the UnitedStates Code.

.03 Section 6012(a) requires every in-dividual who (1) has gross income for the

taxable year which equals or exceeds thesum of the exemption amount plus the ap-plicable standard deduction, or (2) has re-ceived advance payment of earned incomecredit under section 3507 to file an incometax return for that taxable year. In addi-tion, section 6017 requires an individualto file an income tax return with respect toself-employment tax on net earnings fromself-employment of $400 or more.

In order to receive an economic stim-ulus payment to be advanced in 2008, ataxpayer must file an income tax return for2007. See section 6428(g)(2). No advancepayments of economic stimulus amountsshall be made or allowed after December31, 2008. See section 6428(g)(3). Mosttaxpayers who are eligible for the eco-nomic stimulus payment are already re-quired by sections 6012 or 6017 to file areturn. Additionally, some taxpayers whoare not required to file a return neverthe-less file to obtain refunds of withholdingor estimated tax payments.

.04 In the case of a taxpayer required bysections 6012 or 6017 to file an income taxreturn, eligibility for a stimulus payment in2008, and the amount of that payment, isbased on information reported on the tax-payer’s filed income tax return for 2007.See section 6428(g)(2). These taxpayerswill not need to file any extra forms orcall the IRS to request the payment. How-ever, eligible individuals with qualifyingincome not already reported on the 2007income tax return (e.g., certain disability orsurvivor benefits from the VA) may need tofile an amended return in some situationsto receive a larger stimulus payment.

.05 Similarly, for a taxpayer who doesnot have a filing requirement under sec-tions 6012 or 6017, but who files an in-come tax return to receive a refund of with-held tax (for example, tax withheld onwages under section 31), the IRS will de-termine eligibility and the amount of the2008 stimulus payment based on the infor-mation reported on the taxpayer’s filed in-come tax return for 2007.

.06 Many individuals who have lowearned income, or only social security ben-efits, railroad retirement benefits, or cer-tain disability or survivors’ benefits fromthe VA would not be required by sections6012 or 6017 to file an income tax returnand would be due no refund of tax otherthan the economic stimulus amount. No-tice 2008–28 informs these individuals of

the minimum filing necessary to obtain thestimulus payment. Notice 2008–28 ad-vises these individuals to complete onlycertain lines on the income tax return thatare necessary to identify the individual andreport the amount of qualifying income.Thus, in many cases, such as where an in-dividual’s qualifying income consists onlyof social security benefits, the income taxreturn will show no adjusted gross income,even though the individual has minimalamounts of nonqualifying income, such asinterest or dividend income.

.07 To effectuate electronic filing, a re-turn must include at least $1.00 of adjustedgross income.

SECTION 3. SCOPE

This revenue procedure applies to eli-gible individuals who are not required bysections 6012 or 6017 to file an income taxreturn, but who file a return as provided inNotice 2008–28 solely for the purpose ofobtaining a stimulus payment.

SECTION 4. PROCEDURE

.01 An individual, within the scope ofthis revenue procedure, who wishes toelectronically file an income tax returnmay enter $1.00 of income in the Incomesection of the return and at least $1.00 ofadjusted gross income even though thereturn prepared as instructed in Notice2008–28 would otherwise show no ad-justed gross income.

.02 The IRS will not challenge the accu-racy of the entry of $1.00 of adjusted grossincome on the return for any eligible indi-vidual who follows the procedures in No-tice 2008–28 and in this revenue procedureand who has no filing requirement undersections 6012 or 6017.

.03 However, the IRS may challengeand assert any applicable penalties if thereturn contains inaccuracies not related tothis procedure for electronically filing a re-turn solely to claim an economic stimuluspayment. For example, failure to reportactual adjusted gross income (in excess ofthe $1.00) as required would continue to besubject to applicable penalties.

SECTION 5. EXAMPLE

A, an unmarried individual, receives $200 of in-terest income, $100 of dividend income and $7,000of social security retirement benefits during the year

March 24, 2008 657 2008–12 I.R.B.

2007. Under section 86, no portion of A’s social se-curity benefits is includible in A’s gross income for2007. Because A’s gross income does not exceed thesum of the exemption amount plus the basic standarddeduction applicable to an unmarried individual, Ais not required by sections 6012 or 6017 to file anincome tax return for 2007. In accordance with theprocedures provided in Notice 2008–28, A enters theamount of his social security benefits on line 14a ofForm 1040A, but does not enter the amount of his in-terest income or dividend income on Form 1040A. Aseeks to file his return electronically. In order to ef-fectuate the electronic filing of A’s return, A may in-clude $1.00 in the adjusted gross income reported onhis electronically filed return.

26 CFR 601.105: Examination of returns and claimsfor refund, credit, or abatement; determination ofcorrect tax liability.(Also: Part I, §§ 280F; 1.280F–7.)

Rev. Proc. 2008–22

SECTION 1. PURPOSE

.01 This revenue procedure provides:(1) limitations on depreciation deductionsfor owners of passenger automobiles firstplaced in service by the taxpayer duringcalendar year 2008, including a sepa-rate table of limitations on depreciationdeductions for trucks and vans; and (2)the amounts to be included in incomeby lessees of passenger automobiles firstleased by the taxpayer during calendaryear 2008, including a separate table ofinclusion amounts for lessees of trucksand vans.

.02 The tables detailing these depre-ciation limitations and lessee inclusionamounts reflect the automobile price infla-tion adjustments required by § 280F(d)(7)of the Internal Revenue Code.


.01 For owners of passenger automo-biles, § 280F(a) imposes dollar limitationson the depreciation deduction for the yearthat the passenger automobile is placed inservice by the taxpayer and each succeed-ing year. Section 280F(d)(7) requires theamounts allowable as depreciation deduc-tions to be increased by a price inflationadjustment amount for passenger automo-biles placed in service after 1988. Themethod of calculating this price inflationamount for trucks and vans placed in ser-vice in or after calendar year 2003 usesa different CPI “automobile component”

(the “new trucks” component) than thatused in the price inflation amount calcu-lation for other passenger automobiles (the“new cars” component), resulting in some-what higher depreciation deductions fortrucks and vans. This change reflects thehigher rate of price inflation that trucks andvans have been subject to since 1988.

.02 Section 103 of the Economic Stim-ulus Act of 2008, Pub. L. No. 110–185,122 Stat. 613 (Feb. 13, 2008), amended§ 168(k). As amended, § 168(k)(1)(A)provides a 50-percent additional first yeardepreciation deduction for certain newproperty acquired by the taxpayer afterDecember 31, 2007, and before January1, 2009, so long as no written bindingcontract for the acquisition of the propertyexisted prior to January 1, 2008. The Actalso amended § 168(k)(2)(F)(i) to increasethe first year depreciation allowed under§ 280F(a)(1)(A) by $8,000 for passengerautomobiles to which the 50-percent ad-ditional first year depreciation deductionapplies.

.03 Section 168(k)(2)(D)(i) providesthat the 50-percent additional first year de-preciation deduction does not apply to anyproperty required to be depreciated underthe alternative depreciation system of sec-tion 168(g), including property describedin section 280F(b)(1). Further, section168(k)(2)(D)(iii) permits a taxpayer toelect not to claim the 50-percent additionalfirst year depreciation deduction for anyclass of property. Accordingly, this rev-enue procedure provides tables for passen-ger automobiles for which the 50-percentadditional depreciation deduction appliesand tables for passenger automobiles forwhich the 50-percent additional first yeardepreciation deduction does not apply,including passenger automobiles in a classof property for which the taxpayer “electsout” of the 50-percent additional first yeardepreciation deduction.

.04 For leased passenger automobiles,§ 280F(c) requires a reduction in the de-duction allowed to the lessee of the pas-senger automobile. The reduction must besubstantially equivalent to the limitationson the depreciation deductions imposed onowners of passenger automobiles. Under§ 1.280F–7(a) of the Income Tax Regu-lations, this reduction requires the lesseesto include in gross income an inclusionamount determined by applying a formulato the amount obtained from a table. There

is a table for lessees of trucks and vans anda table for all other passenger automobiles.Each table shows inclusion amounts for arange of fair market values for each taxableyear after the passenger automobile is firstleased.

SECTION 3. SCOPE

.01 The limitations on depreciation de-ductions in section 4.02(2) of this revenueprocedure apply to passenger automobiles(other than leased passenger automobiles)that are placed in service by the taxpayerin calendar year 2008, and continue to ap-ply for each taxable year that the passengerautomobile remains in service.

.02 The tables in section 4.03 of thisrevenue procedure apply to leased passen-ger automobiles for which the lease termbegins during calendar year 2008. Lesseesof such passenger automobiles must usethese tables to determine the inclusionamount for each taxable year during whichthe passenger automobile is leased. SeeRev. Proc. 2002–14, 2002–1 C.B. 450, forpassenger automobiles first leased beforeJanuary 1, 2003, Rev. Proc. 2003–75,2003–2 C.B. 1018, for passenger auto-mobiles first leased during calendar year2003, Rev. Proc. 2004–20, 2004–1 C.B.642, for passenger automobiles first leasedduring calendar year 2004, Rev. Proc.2005–13, 2005–1 C.B. 759, for passengerautomobiles first leased during calendaryear 2005, Rev. Proc. 2006–18, 2006–1C.B. 645, for passenger automobiles firstleased during calendar year 2006, and Rev.Proc. 2007–30, 2007–18 I.R.B. 1104, forpassenger automobiles first leased duringcalendar year 2007.

SECTION 4. APPLICATION

.01 In General.(1) Limitations on Depreciation Deduc-

tions for Certain Automobiles. The limita-tions on depreciation deductions for pas-senger automobiles placed in service bythe taxpayer for the first time during calen-dar year 2008 are found in Tables 1 through4 in section 4.02(2) of this revenue proce-dure. Table 1 of this revenue procedureprovides limitations on depreciation de-ductions for a passenger automobile (otherthan a truck or van) for which the 50-per-cent additional first year depreciation de-duction does not apply, including a pas-

2008–12 I.R.B. 658 March 24, 2008

senger automobile (other than a truck orvan) in a class of property for which thetaxpayer elects out of the 50-percent ad-ditional first year depreciation deduction.Table 2 of this revenue procedure provideslimitations on depreciation deductions fora passenger automobile (other than a truckor van) for which the 50-percent additionalfirst year depreciation deduction applies.Table 3 of this revenue procedure provideslimitations on depreciation deductions fora truck or van for which the 50-percentadditional first year depreciation deduc-tion does not apply, including a truck orvan in a class of property for which thetaxpayer elects out of the 50-percent ad-ditional first year depreciation deduction.Table 4 of this revenue procedure provideslimitations on depreciation deductions fora truck or van for which the 50-percent ad-ditional first year depreciation deductionapplies.

(2) Inclusions in Income of Lessees ofPassenger Automobiles. A taxpayer firstleasing a passenger automobile during cal-endar year 2008 must determine the in-clusion amount that is added to gross in-come using the tables in section 4.03 of thisrevenue procedure. The inclusion amountis determined using Table 5 in the caseof a passenger automobile (other than atruck or van), and Table 6 in the case ofa truck or van. In addition, the proceduresof § 1.280F–7(a) must be followed.

.02 Limitations on Depreciation Deduc-tions for Certain Automobiles.

(1) Amount of the Inflation Adjustment.Under § 280F(d)(7)(B)(i), the automobileprice inflation adjustment for any calendaryear is the percentage (if any) by which theCPI automobile component for October of

the preceding calendar year exceeds theCPI automobile component for October1987. The term “CPI automobile com-ponent” is defined in § 280F(d)(7)(B)(ii)as the “automobile component” of theConsumer Price Index for all Urban Con-sumers published by the Department ofLabor (the CPI). The new car componentof the CPI was 115.2 for October 1987 and135.169 for October 2007. The October2007 index exceeded the October 1987index by 19.969. The Internal RevenueService has, therefore, determined thatthe automobile price inflation adjustmentfor 2008 for passenger automobiles (otherthan trucks and vans) is 17.33 percent(19.969/115.2 x 100%). This adjustmentis applicable to all passenger automobiles(other than trucks and vans) that are firstplaced in service in calendar year 2008.The dollar limitations in § 280F(a) musttherefore be multiplied by a factor of0.1733, and the resulting increases, afterrounding to the nearest $100, are added tothe 1988 limitations to give the depreci-ation limitations applicable to passengerautomobiles (other than trucks and vans)for calendar year 2008. To determine thedollar limitations applicable to trucks andvans first placed in service during calen-dar year 2008, the new truck componentof the CPI is used instead of the new carcomponent. The new truck component ofthe CPI was 112.4 for October 1987 and139.513 for October 2007. The October2007 index exceeded the October 1987index by 27.113. The Service has, there-fore, determined that the automobile priceinflation adjustment for 2008 for trucksand vans is 24.12 percent (27.113/112.4 x100%). This adjustment is applicable to

all trucks and vans that are first placed inservice in calendar year 2008. The dollarlimitations in § 280F(a) must therefore bemultiplied by a factor of 0.2412, and theresulting increases, after rounding to thenearest $100, are added to the 1988 limi-tations to give the depreciation limitationsapplicable to trucks and vans.

(2) Amount of the Limitation. For pas-senger automobiles placed in service bythe taxpayer in calendar year 2008, Tables1 through 4 contain the dollar amount ofthe depreciation limitation for each taxableyear. Use Table 1 for a passenger auto-mobile (other than a truck or van) placedin service by the taxpayer in calendar year2008, for which the 50-percent additionalfirst year depreciation deduction does notapply, including a passenger automobile(other than a truck or van) in a class ofproperty for which the taxpayer elects outof the 50-percent additional first year de-preciation deduction. Use Table 2 for apassenger automobile (other than a truckor van) placed in service by the taxpayer incalendar year 2008, for which the 50-per-cent additional first year depreciation de-duction applies. Use Table 3 for a truckor van placed in service by the taxpayer incalendar year 2008, for which the 50-per-cent additional first year depreciation de-duction does not apply, including a truckor van in a class of property for which thetaxpayer elects out of the 50-percent ad-ditional first year depreciation deduction.Use Table 4 for a truck or van placed inservice by the taxpayer in calendar year2008, for which the 50-percent additionalfirst year depreciation deduction applies.

REV. PROC. 2008–22 TABLE 1

DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES(THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE BY THE TAXPAYER IN

CALENDAR YEAR 2008, FOR WHICH THE 50-PERCENT ADDITIONAL FIRST YEARDEPRECIATION DEDUCTION DOES NOT APPLY

Tax Year Amount

1st Tax Year $2,9602nd Tax Year $4,8003rd Tax Year $2,850Each Succeeding Year $1,775

March 24, 2008 659 2008–12 I.R.B.


DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES(THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE BY THE TAXPAYER IN

CALENDAR YEAR 2008, FOR WHICH THE 50-PERCENT ADDITIONAL FIRST YEARDEPRECIATION DEDUCTION APPLIES

Tax Year Amount



DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE BYTHE TAXPAYER IN CALENDAR YEAR 2008, FOR WHICH THE 50-PERCENTADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION DOES NOT APPLY

Tax Year Amount



DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE BYTHE TAXPAYER IN CALENDAR YEAR 2008, FOR WHICH THE 50-PERCENT

ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES

Tax Year Amount


.03 Inclusions in Income of Lessees ofPassenger Automobiles.

The inclusion amounts for passengerautomobiles first leased in calendar year

2008 are calculated under the proceduresdescribed in § 1.280F–7(a). Lessees ofpassenger automobiles other than trucksand vans should use Table 5 of this revenue

procedure in applying these procedures,while lessees of trucks and vans should useTable 6 of this revenue procedure.


DOLLAR AMOUNTS FOR PASSENGER AUTOMOBILES(THAT ARE NOT TRUCKS OR VANS)

WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2008

Fair Market Value of PassengerAutomobile

Tax Year During Lease

Over Not Over 1st 2nd 3rd 4th 5th & Later

$18,500 $19,000 20 42 62 73 8419,000 19,500 22 47 71 83 9419,500 20,000 25 53 78 93 10620,000 20,500 27 58 87 102 11720,500 21,000 30 63 95 112 12821,000 21,500 32 69 103 122 139

2008–12 I.R.B. 660 March 24, 2008

REV. PROC. 2008–22 TABLE 5—Continued






21,500 22,000 34 75 111 131 15122,000 23,000 38 83 123 146 16723,000 24,000 43 94 139 165 19024,000 25,000 48 105 155 185 21225,000 26,000 53 115 172 204 23526,000 27,000 58 126 188 223 25727,000 28,000 63 137 204 243 27928,000 29,000 68 148 220 262 30229,000 30,000 73 159 236 282 32430,000 31,000 78 170 252 301 34731,000 32,000 83 181 268 321 36832,000 33,000 88 192 284 340 39133,000 34,000 93 202 301 359 41434,000 35,000 98 213 317 379 43635,000 36,000 103 224 333 398 45936,000 37,000 108 235 349 418 48137,000 38,000 113 246 365 437 50338,000 39,000 118 257 381 457 52539,000 40,000 123 268 397 476 54840,000 41,000 128 279 413 495 57141,000 42,000 133 289 430 515 59342,000 43,000 137 301 446 534 61543,000 44,000 142 312 462 553 63844,000 45,000 147 323 478 573 65945,000 46,000 152 333 495 592 68246,000 47,000 157 344 511 611 70547,000 48,000 162 355 527 631 72748,000 49,000 167 366 543 650 75049,000 50,000 172 377 559 670 77250,000 51,000 177 388 575 689 79451,000 52,000 182 399 591 709 81652,000 53,000 187 410 607 728 83953,000 54,000 192 420 624 747 86254,000 55,000 197 431 640 767 88455,000 56,000 202 442 657 785 90656,000 57,000 207 453 673 805 92857,000 58,000 212 464 689 824 95158,000 59,000 217 475 705 844 97359,000 60,000 222 486 721 863 99660,000 62,000 229 502 746 892 1,02962,000 64,000 239 524 778 931 1,07464,000 66,000 249 546 810 970 1,11866,000 68,000 259 567 843 1,008 1,16468,000 70,000 269 589 875 1,047 1,20970,000 72,000 279 611 907 1,086 1,25372,000 74,000 289 633 939 1,125 1,29874,000 76,000 299 654 972 1,164 1,34276,000 78,000 309 676 1,004 1,203 1,38778,000 80,000 319 698 1,036 1,242 1,43280,000 85,000 336 736 1,093 1,309 1,51185,000 90,000 361 791 1,173 1,406 1,62390,000 95,000 386 845 1,255 1,503 1,73495,000 100,000 410 900 1,335 1,600 1,846

100,000 110,000 448 981 1,457 1,745 2,014

March 24, 2008 661 2008–12 I.R.B.







110,000 120,000 497 1,090 1,619 1,939 2,238120,000 130,000 547 1,199 1,780 2,133 2,462130,000 140,000 597 1,308 1,942 2,327 2,685140,000 150,000 646 1,417 2,103 2,521 2,910150,000 160,000 696 1,526 2,265 2,715 3,133160,000 170,000 745 1,635 2,427 2,908 3,357170,000 180,000 795 1,744 2,588 3,103 3,581180,000 190,000 845 1,853 2,750 3,296 3,805190,000 200,000 894 1,962 2,912 3,490 4,028200,000 210,000 944 2,071 3,073 3,684 4,252210,000 220,000 994 2,179 3,235 3,878 4,476220,000 230,000 1,043 2,289 3,396 4,072 4,700230,000 240,000 1,093 2,397 3,559 4,265 4,924240,000 and up 1,142 2,507 3,720 4,459 5,148


DOLLAR AMOUNTS FOR TRUCKS AND VANSWITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2008

Fair Market Value of Truck or Van Tax Year During Lease

Over Not Over 1st 2nd 3rd 4th 5th & later

$19,000 $19,500 17 37 54 65 7319,500 20,000 20 42 63 73 8520,000 20,500 22 48 70 84 9620,500 21,000 25 53 79 93 10721,000 21,500 27 59 86 103 11821,500 22,000 30 64 95 112 13022,000 23,000 33 72 107 128 14623,000 24,000 38 83 123 147 16824,000 25,000 43 94 139 166 19125,000 26,000 48 105 155 186 21326,000 27,000 53 116 171 205 23627,000 28,000 58 127 187 225 25828,000 29,000 63 138 204 243 28029,000 30,000 68 148 221 263 30230,000 31,000 73 159 237 282 32531,000 32,000 78 170 253 301 34832,000 33,000 83 181 269 321 37033,000 34,000 88 192 285 340 39334,000 35,000 93 203 301 360 41435,000 36,000 98 214 317 379 43736,000 37,000 103 225 333 399 45937,000 38,000 108 235 350 418 48238,000 39,000 113 246 366 437 50539,000 40,000 118 257 382 457 52640,000 41,000 123 268 398 476 54941,000 42,000 128 279 414 496 57142,000 43,000 133 290 430 515 59443,000 44,000 137 301 447 534 61644,000 45,000 142 312 463 553 63945,000 46,000 147 323 479 573 661

2008–12 I.R.B. 662 March 24, 2008


DOLLAR AMOUNTS FOR TRUCKS AND VANSWITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2008

Fair Market Value of Truck or Van Tax Year During Lease

Over Not Over 1st 2nd 3rd 4th 5th & later

46,000 47,000 152 334 495 592 68447,000 48,000 157 345 511 612 70548,000 49,000 162 356 527 631 72849,000 50,000 167 366 544 651 75050,000 51,000 172 377 560 670 77351,000 52,000 177 388 576 689 79652,000 53,000 182 399 592 709 81753,000 54,000 187 410 608 728 84054,000 55,000 192 421 624 748 86255,000 56,000 197 432 640 767 88556,000 57,000 202 443 656 787 90757,000 58,000 207 453 673 806 92958,000 59,000 212 464 689 825 95259,000 60,000 217 475 705 845 97460,000 62,000 224 492 729 874 1,00862,000 64,000 234 513 762 913 1,05264,000 66,000 244 535 794 951 1,09866,000 68,000 254 557 826 990 1,14268,000 70,000 264 579 858 1,029 1,18770,000 72,000 274 600 892 1,067 1,23272,000 74,000 284 622 924 1,106 1,27674,000 76,000 294 644 956 1,145 1,32176,000 78,000 304 666 988 1,184 1,36678,000 80,000 314 687 1,021 1,222 1,41180,000 85,000 331 726 1,077 1,290 1,48985,000 90,000 356 780 1,158 1,387 1,60190,000 95,000 381 835 1,238 1,484 1,71395,000 100,000 405 889 1,320 1,581 1,825

100,000 110,000 443 971 1,440 1,727 1,993110,000 120,000 492 1,080 1,602 1,921 2,216120,000 130,000 542 1,189 1,764 2,114 2,440130,000 140,000 592 1,297 1,926 2,308 2,665140,000 150,000 641 1,407 2,087 2,502 2,888150,000 160,000 691 1,515 2,249 2,696 3,112160,000 170,000 740 1,625 2,410 2,890 3,336170,000 180,000 790 1,733 2,573 3,083 3,560180,000 190,000 840 1,842 2,734 3,278 3,783190,000 200,000 889 1,951 2,896 3,472 4,007200,000 210,000 939 2,060 3,058 3,665 4,231210,000 220,000 989 2,169 3,219 3,859 4,455220,000 230,000 1,038 2,278 3,381 4,053 4,678230,000 240,000 1,088 2,387 3,542 4,247 4,903240,000 and up 1,137 2,496 3,704 4,441 5,126


This revenue procedure applies to pas-senger automobiles (other than leased pas-senger automobiles) that are first placedin service by the taxpayer during calendaryear 2008, and to leased passenger auto-mobiles that are first leased by the taxpayerduring calendar year 2008.


The principal author of this revenueprocedure is Bernard P. Harvey of the Of-fice of Associate Chief Counsel (IncomeTax & Accounting). For further informa-tion regarding the depreciation limitationsand lessee inclusion amounts in this rev-

enue procedure, contact Bernard P. Harveyat (202) 622–4930 (not a toll-free call).

March 24, 2008 663 2008–12 I.R.B.

26 CFR 601.204: Changes in accounting periodsand in methods of accounting.(Also Part I, §§ 446; 472; 1.446–1; 1.472–1;1.472–8.)

Rev. Proc. 2008–23

SECTION 1. PURPOSE

This revenue procedure provides analternative dollar-value last-in, first-out(LIFO) pooling method, the Vehicle-PoolMethod, for retail dealers and wholesaledistributors (collectively, “resellers”) ofcars and light-duty trucks. This revenueprocedure also provides the exclusive pro-cedures for obtaining automatic consentto change to the Vehicle-Pool Method. Inaddition, this revenue procedure modifiesRev. Proc. 97–36, 1997–2 C.B. 450, andRev. Proc. 2001–23, 2001–1 C.B. 784,as modified by Announcement 2004–16,2004–1 C.B. 668, to provide the permis-sible method of pooling for crossovervehicles for resellers of cars and light-dutytrucks that do not use the Vehicle-PoolMethod.


.01 Section 472(a) of the InternalRevenue Code provides generally that ataxpayer may use the LIFO method ofinventorying goods if, among other re-quirements, the change to, and use of, themethod is in accordance with such reg-ulations as the Secretary may prescribeas necessary in order that the use of themethod may clearly reflect income.

.02 Section 1.472–8(a) of the IncomeTax Regulations provides that any tax-payer may elect to determine the cost of itsLIFO inventories under the dollar-valueLIFO method of accounting, providedsuch method is used consistently andclearly reflects income in accordance withthe rules of § 1.472–8.

.03 Section 1.472–8(b)(1) requiresmanufacturers and processors to estab-lish one pool for each natural businessunit unless the taxpayer elects under§ 1.472–8(b)(3) to establish multiplepools. In addition, § 1.472–8(b)(1) re-quires that where the manufacturer orprocessor is also engaged in the whole-saling or retailing of goods purchasedfrom others, any pooling of the LIFO in-ventory of such purchased goods for the

wholesaling or retailing operations shallbe determined in accordance with the rulesof § 1.472–8(c) (concerning pools of re-sellers).

.04 Section 1.472–8(c)(1) requires, inrelevant part, a reseller to establish dollar-value pools based on major lines, types, orclasses of goods.

.05 Section 1.472–8(g)(1) provides thatany change in method of pooling autho-rized by § 1.472–8 and used in computingthe taxpayer’s LIFO inventories under thedollar-value LIFO method shall be treatedas a change in method of accounting. Anymethod of pooling that is authorized by§ 1.472–8 shall be used for the year ofadoption and for all subsequent taxableyears unless a change is required by theCommissioner in order to clearly reflectincome, or unless permission to change isgranted by the Commissioner as providedin § 1.446–1(e). If the taxpayer changesfrom one method of pooling to anothermethod of pooling, the ending LIFO inven-tory for the taxable year preceding the yearof change shall be restated under the newmethod of pooling.

.06 Section 1.472–8(g)(2)(i) provides,in relevant part, that a taxpayer who hasbeen using the dollar-value LIFO methodand who is permitted or required to changeits method of pooling shall combine orseparate the LIFO value of its inventoryfor the base year and each yearly layerof increment in order to conform to thenew pool or pools. The combination orseparation of the LIFO value of the tax-payer’s inventory for the base year andeach yearly layer of increment shall bemade in accordance with the appropriatemethod in § 1.472–8(g)(2), unless the useof a different method is approved by theCommissioner. Section 1.472–8(g)(2)(ii)provides rules that a taxpayer must ap-ply when separating a pool. Sections1.472–8(g)(2)(iii) and (iv) provide alter-native rules that a taxpayer must applywhen combining pools. These sectionsalso contain examples showing the appli-cation of the rules for taxpayers that usedouble-extension LIFO.

.07 A taxpayer generally may obtainautomatic consent under § 446(e) and§ 1.446–1(e)(2)(i) to change to a methodof accounting listed in the APPENDIX ofRev. Proc. 2002–9, 2002–1 C.B. 327, asmodified and clarified by Announcement2002–17, 2002–1 C.B. 561, as modified

and amplified by Rev. Proc. 2002–19,2002–1 C.B. 696, and as amplified, clari-fied and modified by Rev. Proc. 2002–54,2002–2 C.B. 432.

.08 Under the “Alternative LIFOMethod” provided in Rev. Proc. 97–36and listed in section 10.03 of the APPEN-DIX of Rev. Proc. 2002–9, a retail dealerof new cars or new trucks (“automobiledealer”) must establish one pool for allnew cars and a separate pool for all newlight-duty trucks (two-pools rule). For thispurpose, “light-duty truck” means a truckwith a gross vehicle weight that does notexceed 14,000 pounds. These light-dutytrucks sometimes are referred to as “class1,” “class 2,” and “class 3” trucks.

.09 Under the “Used Vehicle Alterna-tive LIFO Method” provided in Rev. Proc.2001–23, 2001–1 C.B. 784, as modifiedby Announcement 2004–16, 2004–1 C.B.668, and listed in section 10.04 of theAPPENDIX of Rev. Proc. 2002–9, areseller of used cars or used light-dutytrucks (“used vehicle dealer”) must estab-lish one pool for all used cars and a sep-arate pool for all used light-duty trucks(two-pools rule). Again, “light-duty truck”means a truck with a gross vehicle weightthat does not exceed 14,000 pounds (i.e.,class 1, class 2, or class 3 truck). Fur-thermore, “used car” and “used light-dutytruck” mean previously titled vehicles, ex-cluding demonstrator vehicles. A taxpayermay choose to assign a used sport-utilityvehicle (“SUV”) or a used “hybrid” vehi-cle (e.g., van and minivan) to either its usedcar pool or its used light-duty truck pool.Once the taxpayer has assigned one usedSUV or one used hybrid vehicle to a pool,the taxpayer must assign all used SUVsand all used hybrid vehicles to that samepool in subsequent years.

.10 The two-pools rule found in bothRev. Proc. 97–36 and Rev. Proc. 2001–23is based on the opinions in Fox Chevrolet,Inc. Maryland v. Commissioner, 76 T.C.708 (1981), acq., 1984–2 C.B. 1, in whichtax years from 1972 through 1974 wereat issue, and Richardson Investments, Inc.,and Subsidiaries v. Commissioner, 76 T.C.736 (1981), in which tax years 1971, 1972,and 1974 were at issue. After acknowledg-ing the similarities of cars and trucks, thecourt in Fox Chevrolet focused on their dif-ferences in deciding that cars and trucks donot constitute a single class of goods under§ 1.472–8(c)(1). First, the court noted that

2008–12 I.R.B. 664 March 24, 2008

cars and trucks appeal to different typesof purchasers. “The market for [cars] iscomprised in the main of persons amongthe general public who desire to acquirea means of transporting themselves be-tween locations, usually within their com-munity and occasionally on extended out-ings to more distant locales. Trucks, onthe other hand, are more often bought forbusiness use. They are used principallyfor transporting property.” 76 T.C. at 725.Second, the court observed that the na-ture of the operation of trucks is quite dif-ferent from that of cars. “Due to theirsize, weight, and in some instances me-chanical complexity, greater experience ortraining is occasionally required to oper-ate trucks designed to haul property. Fur-thermore, the evidence in this case revealsthat trucks are a more expensive invest-ment than is the average [car]. The regis-tration and other legal requirements for theoperation of trucks also tend to be muchmore stringent than those for [cars].” 76T.C. at 725. Finally, the court rejectedthe argument that light-duty trucks are ac-quired by the same class of consumers andare used interchangeably for the same pur-poses as cars. “While economy and light-duty trucks are certainly closer to automo-biles than are heavy-duty trucks, and it isalways difficult to draw a fine line, we be-lieve that smaller trucks have more in com-mon with other types of trucks than theydo with [cars]. In any event, if light-dutytrucks are a hybrid, they are far from fullyinterchangeable with [cars]. The line isdifficult to draw, but is more appropriatelydrawn between trucks and cars than be-tween different classes of trucks.” 76 T.C.at 726. In Richardson Investments, theTax Court, citing Fox Chevrolet as control-ling authority, rejected a Ford dealer’s ar-gument that it may assign cars and trucksto a single “transportation” pool. Notingthat this taxpayer did not include used ve-hicles and recreational vehicles in the samepool, the court also noted that Ford Mo-tor Company’s advertising campaign dis-tinguished between the commercial natureof Ford trucks (“built tough”) and the per-sonal nature of Ford Granadas (“look andride like a Mercedes”).

.11 The Treasury Department andthe Internal Revenue Service recognizethat the distinctions between cars andlight-duty trucks have diminished signifi-cantly since Fox Chevrolet and Richardson

Investments were decided. For example,during the 1970s, most cars were pur-chased to transport people for personalpurposes, and most trucks were purchasedto transport property for business pur-poses. Today, however, manufacturersadvertise that their light-duty trucks of-fer the ride, handling, and amenities ofcars plus the additional seating and cargocapacity that larger families need to trans-port themselves and their personal-useproperty. Furthermore, people do notneed a special operator’s license to drivelight-duty trucks on highways. More-over, the distinctions between cars andlight-duty trucks that existed during the1970s have been reduced significantlyby the creation of “crossover” vehicles,which share some characteristics of bothcars and light-duty trucks (e.g., SUVs,minivans, and similar vehicles, formerlydenoted as “hybrid”). Because of thesechanges, sales of light-duty trucks havegreatly increased relative to sales of cars.Also, today federal regulators treat carsand light-duty trucks with greater similar-ity in regulations promulgated under boththe Energy Policy and Conservation Actof 1975 (49 U.S.C. 32902), which sets fueleconomy standards, and the Clean Air Act(42 U.S.C. 7521), which sets emissionsstandards.

SECTION 3. SCOPE

Any reseller of cars or light-duty trucksthat is subject to the dollar-value LIFOpooling rules of § 1.472–8(c)(1), Rev.Proc. 97–36, or Rev. Proc. 2001–23 mayuse the Vehicle-Pool Method, as describedsection 4.01(1) of this revenue procedure.Also, any reseller of cars or light dutytrucks that has crossover vehicles and thatuses the Alternative LIFO Method underRev. Proc. 97–36 or the Used Vehicle Al-ternative LIFO Method under Rev. Proc.2001–23 must use the method of poolingfor crossover vehicles under Rev. Proc.97–36 or Rev. Proc. 2001–23, as de-scribed in section 4.02(1) of this revenueprocedure if the reseller does not choose touse the Vehicle-Pool Method described insection 4.01(1) of this revenue procedure.

SECTION 4. APPLICATION

.01 Vehicle-Pool Method.

(1) Description. Under the Vehicle-Pool Method, a reseller with new vehicles(i.e., new cars, new light-duty trucks, andnew crossover vehicles, including SUVs,vans, minivans, and other similar vehi-cles) may establish a New Vehicle pool forall new vehicles. In addition, under thismethod, a reseller with used vehicles (i.e.,used cars, used light-duty trucks, and usedcrossover vehicles, including SUVs, vans,minivans, and other similar vehicles) mayestablish a Used Vehicle pool for all usedvehicles. No pool established under thisrevenue procedure may include a vehiclewith a gross vehicle weight that exceeds14,000 pounds.

(2) Change to the Vehicle-Pool Method.(a) Pursuant to section 6.01 of Rev.

Proc. 2002–9 (or successor), a resellerwithin the scope of this revenue proce-dure and Rev. Proc. 2002–9, as modifiedby this revenue procedure, is granted theCommissioner’s consent to change to theVehicle-Pool Method described in section4.01(1) of this revenue procedure, pro-vided the reseller follows the provisionsof Rev. Proc. 2002–9, with the followingmodifications:

(i) The scope limitation in section4.02(6) of Rev. Proc. 2002–9 does notapply for the reseller’s first taxable yearending on or after December 31, 2007; and

(ii) The designated automatic account-ing method change number for a change inmethod of accounting to the Vehicle-PoolMethod made pursuant to this revenueprocedure is “112.” A reseller also concur-rently changing to the Alternative LIFOMethod under Rev. Proc. 97–36 or theUsed Vehicle Alternative LIFO Methodunder Rev. Proc. 2001–23 should file asingle Form 3115, Application for Changein Accounting Method, for both changesand enter both designated numbers onits Form 3115. For example, a resellerconcurrently changing to the Alterna-tive LIFO Method and the Vehicle-PoolMethod should enter both “58 and 112” onits Form 3115.

(b) A reseller that changes its poolingmethod under this revenue procedure mustmake the change on a cut-off basis (seesection 2.06 of Rev. Proc. 2002–9) andmust comply with § 1.472–8(g). Insteadof using the earliest taxable year for whichthe reseller adopted the LIFO method forany items in a pool, the reseller must usethe year of change as the base year when

March 24, 2008 665 2008–12 I.R.B.

determining the LIFO value of that poolfor the year of change and subsequent tax-able years (i.e., the cumulative index atthe beginning of the year of change willbe 1.00). The reseller must restate thebase-year cost of all layers of incrementin a pool at the beginning of the year ofchange in terms of new base-year cost.For an example of establishing a new baseyear, see § 1.472–8(e)(3)(iv)(B)(1)(ii).

.02 Method of Pooling for CrossoverVehicles under Rev. Proc. 97–36 and Rev.Proc. 2001–23.

(1) Description. A reseller of cars andlight duty trucks that uses the AlternativeLIFO Method under Rev. Proc. 97–36or the Used Vehicle Alternative LIFOMethod under Rev. Proc. 2001–23 andthat maintains separate new car and newtruck pools or separate used car and usedtruck pools, or both, (in lieu of the Ve-hicle Pool Method described in section4.01(1) of this revenue procedure) mustassign new crossover vehicles to eitherthe new car pool or the new truck pool,whichever is more reasonable under all thefacts and circumstances, and must assignused crossover vehicles to either the usedcar pool or the used truck pool, whicheveris more reasonable under all the facts andcircumstances.

(2) Change to the method of pooling forcrossover vehicles under Rev. Proc. 97–36and Rev. Proc. 2001–23. A reseller withinthe scope of this revenue procedure thatwants to change to the method of poolingfor crossover vehicles under Rev. Proc.97–36 and Rev. Proc. 2001–23, as pro-vided in section 4.02(1) of this revenueprocedure, must use the provisions of Rev.Proc. 97–27, 1997–1 C.B. 680, as modi-fied and amplified by Rev. Proc. 2002–19,

2002–1 C.B. 696, as amplified and clar-ified by Rev. Proc. 2002–54, 2002–2C.B. 432, and as modified by Rev. Proc.2007–67, 2007–48 I.R.B 1072.

SECTION 5. AUDIT PROTECTION

A reseller’s use of the Vehicle-PoolMethod in accordance with section 4.01(1)of this revenue procedure on a federalincome tax return filed before March 7,2008, will not be raised as an issue by theService. In addition, if a reseller’s use ofthe Vehicle-Pool Method in accordancewith section 4.01(1) of this revenue pro-cedure on a federal income tax return filedbefore March 7, 2008, is an issue underconsideration in an examination, in anappeals office, or before the Tax Court,the issue will not be further pursued bythe Service. However, the audit protectiongranted by this section 5 extends only tothe question of whether the reseller has es-tablished the appropriate number of poolsunder § 1.472–8(c)(1). Thus, this section 5does not prohibit the Service from raisingor pursuing other inventory-related issuesin an examination, in an appeals office,and before the Tax Court.


.01. Changes to Rev. Proc. 97–36.(1) Rev. Proc. 97–36 is modified to

permit an automobile dealer to establish aNew Vehicle pool for inventories of newcars, new crossover vehicles, and newlight-duty trucks.

(2) Rev. Proc. 97–36 is modified to re-quire an automobile dealer that maintainsseparate new car and new truck pools un-

der section 4.02(1) of Rev. Proc. 97–36to assign new crossover vehicles to eitherthe new car pool or the new truck pool,whichever is more reasonable under all thefacts and circumstances.

.02. Changes to Rev. Proc. 2001–23.(1) Rev. Proc. 2001–23 is modified

to permit a used vehicle dealer to estab-lish a Used Vehicle pool for inventoriesof used cars, used crossover vehicles, andused light-duty trucks.

(2) Section 4.02(3) of Rev. Proc.2001–23 is modified to require a used ve-hicle dealer that maintains separate usedcar and used truck pools to assign usedcrossover vehicles to either the used carpool or the used truck pool, whichever ismore reasonable under all the facts andcircumstances.


In general, this revenue procedure is ef-fective for taxable years ending on or af-ter December 31, 2007. However, sections4.02, 6.01(2) and 6.02(2) of this revenueprocedure are effective for taxable yearsending on or after March 7, 2008.


The principal author of this revenueprocedure is Leo F. Nolan II of the Officeof Associate Chief Counsel (Income Tax& Accounting). For further informationregarding this revenue procedure, contactLeo F. Nolan II at (202) 622–4970 (not atoll-free call).

2008–12 I.R.B. 666 March 24, 2008

Part IV. Items of General InterestVoluntary ComplianceInitiative Covering Policies ofInsurance and ReinsuranceIssued by Foreign Insurersand Foreign Reinsurers

Announcement 2008–18

Section 1. Overview and Purpose of theVoluntary Compliance Initiative.

This announcement describes a volun-tary compliance initiative by the InternalRevenue Service (IRS) regarding the for-eign insurance excise tax. The purposeof this voluntary compliance initiative isto encourage foreign insurers, reinsurers,and other agents, solicitors and brokers tocomply with their obligations under sec-tion 4371 through 4374 of the InternalRevenue Code (the Code), and in partic-ular, with their obligations described inRevenue Ruling 2008–15, 2008–12 I.R.B.633.

Revenue Ruling 2008–15 generallyclarifies the foreign insurance excise taxconsequences under section 4371 et seq.of the Code with respect to premiums paidby one foreign insurer or reinsurer to an-other, including the consequences wherethe first-mentioned foreign insurer or rein-surer qualifies for an exemption from theforeign insurance excise tax under an in-come tax treaty with the United Statesand the second foreign insurer or reinsurerdoes not qualify for such an exemption.

In order to ensure that all participantsin the industry are aware of these tax con-sequences and their associated reportingand record-keeping obligations, and havea reasonable period of time to come intocompliance with them, the IRS is announc-ing herein that, unless otherwise noted, itwill not examine issues arising under thesituations set forth in Rev. Rul. 2008–15in respect of reinsurance premiums paidby one foreign insurer or reinsurer to an-other prior to October 1, 2008, the first dayof the quarterly excise tax period begin-ning six months after this announcementis published in the Internal Revenue Bul-letin. The specific terms of this voluntarycompliance initiative are as follows.

Section 2. Eligibility for the VoluntaryCompliance Initiative.

.01 Eligible Foreign Person. Any for-eign insurer or reinsurer, as defined in sec-tion 4372(a), or any other foreign personliable for the tax imposed by section 4371of the Code (“eligible foreign person”), iseligible to participate if such person hasfailed to file timely one or more Form 720returns (Quarterly Federal Excise Tax Re-turn) and pay or remit any foreign insur-ance excise taxes due with respect to pre-miums paid or received during any quar-terly tax period ending prior to October 1,2008. An eligible foreign person also in-cludes any foreign insurer or reinsurer thathas failed to satisfy the treaty-based returndisclosure requirements of Treas. Reg.§ 301.6114–1(c)(viii), if applicable, withrespect to claiming an exemption from for-eign insurance excise tax under a U.S. in-come tax treaty during any such period.

.02 Ineligible Failures to File. Notwith-standing that a foreign insurer or reinsureris an eligible foreign person, certain fail-ures by that person to file a Form 720 re-turn and pay excise tax will not fall withinthe scope of the initiative. Accordingly,such failures to file and pay occurring dur-ing any quarterly tax period ending priorto October 1, 2008, will not be protectedfrom examination as described in Section5 below, regardless of whether the foreigninsurer or reinsurer is a participating tax-payer, as described in Section 3 below, inthis voluntary compliance initiative. Thefailures to file that are not covered by thisinitiative include:

a. In the case of a foreign insurer orreinsurer that has entered into a closingagreement with the IRS based on Appen-dix A of Rev. Proc. 2003–78, 2003–2 C.B.1029, or any predecessor revenue proce-dure, any failure to pay foreign insuranceexcise tax with respect to premiums re-ceived on policies issued by that foreigninsurer or reinsurer that do not qualify foran exemption from tax under the incometax treaty with the country in which itis resident because that foreign insurer orreinsurer has reinsured, in whole or in part,a policy of reinsurance with a foreign rein-surer not entitled to an exemption from taxunder that treaty or any other treaty; and

b. In the case of a foreign insurer orreinsurer that has entered into a closingagreement with the IRS based on Appen-dix B of Rev. Proc. 2003–78, 2003–2C.B. 1029, any failure to pay foreign in-surance excise tax with respect to premi-ums received on policies issued by that for-eign insurer or reinsurer where, as part ofa conduit arrangement, the foreign insureror reinsurer reinsures, in whole or in part, apolicy of insurance or reinsurance with anyperson not entitled to an exemption fromtax under that treaty or any other treaty.

Section 3. Participation Requirements.

.01 Participating Taxpayers. A par-ticipating taxpayer under this voluntarycompliance initiative is any eligible for-eign person that timely files the applicableForm 720 return or returns and pays anyforeign insurance excise taxes due withrespect to premiums paid or received onor after October 1, 2008, or, if applicable,who timely discloses in accordance withsection 6114 of the Code its treaty-basedreturn position that it is entitled to an ex-emption under an income tax treaty withthe United States with respect to suchpremiums. If a participating taxpayerdoes not make any premium payment forpolicies of reinsurance covering contractsdescribed in section 4371 of the Code dur-ing the quarterly tax period beginning onOctober 1, 2008, and is not otherwise obli-gated to file a Form 720 return to disclosea treaty-based return position, it may stillparticipate in this compliance initiativeif it timely files a blank Form 720 returnwith the notation described in Section 4below.

.02 Recordkeeping Requirements. Ataxpayer will not be considered a partic-ipating taxpayer, however, if it does notalso comply with the record-keeping re-quirements in Treas. Reg. § 46.4371–4with respect to premiums paid or receivedon or after October 1, 2008, which includesmaintaining the appropriate records “for atleast 3 years from the date any part of thetax became due or the date any part of thetax is paid, whichever is later, in such man-ner as to be readily accessible to authorizedinternal revenue officers or employees”.

.03 Determination of Date of Receipt.For purposes of determining whether for-

March 24, 2008 667 2008–12 I.R.B.

eign insurance excise taxes are due withrespect to premiums received by a for-eign insurer or reinsurer, a premium willbe treated as received on or after October1, 2008, if the date on which the liabil-ity for the foreign insurance excise tax at-taches, within the meaning of Treas. Reg.§46.4374–1(b), occurs on or after October1, 2008. For example, if an insured pays toa participating taxpayer, prior to October 1,2008, a premium on a covered policy thatis exempt from foreign insurance excisetax under section 4371 of the Code by rea-son of an income tax treaty, and the partici-pating taxpayer makes a premium paymentreinsuring the risk covered by such policywith a person not entitled to the benefits ofan income tax treaty on or after October 1,2008, liability for the foreign insurance ex-cise tax with respect to the premium paidto the participating taxpayer will generallyattach as of the date that the second pre-mium is paid by the participating taxpayer,and will, therefore, be treated as receivedby the participating taxpayer on or afterOctober 1, 2008.

Section 4. Notification Procedures forParticipating Taxpayers.

A participating taxpayer under this vol-untary compliance initiative must file itsForm 720 return described in Section 3above with the Cincinnati Service Centerat the following address:

Department of TreasuryInternal Revenue Service CenterCincinnati, OH 45999–0009

In addition to filing its Form 720 re-turn with the Cincinnati Service Center, aparticipating taxpayer must also notify theIRS of its election to participate by includ-ing a notation, as described below, on theForm 720 return.

A participating taxpayer must notate inred print at the top of the Form 720 returnthe following statement:

Election to participate in FET Volun-tary Compliance Initiative pursuant to An-nouncement 2008–18.

Section 5. Terms for ParticipatingTaxpayers.

Except as provided in Section 2.02, theIRS agrees not to examine any participat-ing taxpayer (whether a foreign insurer,reinsurer, agent, solicitor or broker) withrespect to tax liabilities arising underthe four situations set forth in Rev. Rul.2008–15, or any similar fact pattern, to theextent that premiums are paid or receivedby the participating taxpayer during anyquarterly tax period prior to October 1,2008.

Section 6. Non-participating Taxpayers.

A non-participating taxpayer under thisvoluntary compliance initiative is defined

as an eligible foreign person who is not aparticipating taxpayer.

The IRS may: (a) conduct examina-tions of a non-participating taxpayer cov-ering any and all excise taxes due undersection 4371 of the Code for any open taxperiods, including tax periods beginningprior to October 1, 2008; and, (b) deter-mine and assess the correct excise taxesdue under section 4371 of the Code, in-cluding interest, additions to tax, and, ifapplicable, penalties under section 6712 ofthe Code for failure to disclose a treaty-based return position under section 6114of the Code and the regulations thereun-der, and penalties under section 7270 ofthe Code for failure to comply with section4374 of the Code.

Section 7. Contact Information.

Various personnel from the Officeof Large and Mid-Sized Business Unit,the Office of Small Business/Self Em-ployed Business Unit, and the Officeof the Associate Chief Counsel (Inter-national), participated in drafting thisannouncement. For further informationregarding this announcement, contactCharles E. Jenkins with the Office of Largeand Mid-Sized Business Unit (Pre-Filingand Technical Guidance) via e-mail [email protected], or Jody Angelowith the Office of Small Business/SelfEmployed Business Unit (Excise Policy)via e-mail at [email protected].

2008–12 I.R.B. 668 March 24, 2008

Definition of TermsRevenue rulings and revenue procedures(hereinafter referred to as “rulings”) thathave an effect on previous rulings use thefollowing defined terms to describe the ef-fect:

Amplified describes a situation whereno change is being made in a prior pub-lished position, but the prior position is be-ing extended to apply to a variation of thefact situation set forth therein. Thus, ifan earlier ruling held that a principle ap-plied to A, and the new ruling holds that thesame principle also applies to B, the earlierruling is amplified. (Compare with modi-fied, below).

Clarified is used in those instanceswhere the language in a prior ruling is be-ing made clear because the language hascaused, or may cause, some confusion.It is not used where a position in a priorruling is being changed.

Distinguished describes a situationwhere a ruling mentions a previously pub-lished ruling and points out an essentialdifference between them.

Modified is used where the substanceof a previously published position is beingchanged. Thus, if a prior ruling held that aprinciple applied to A but not to B, and thenew ruling holds that it applies to both A

and B, the prior ruling is modified becauseit corrects a published position. (Comparewith amplified and clarified, above).

Obsoleted describes a previously pub-lished ruling that is not considered deter-minative with respect to future transac-tions. This term is most commonly used ina ruling that lists previously published rul-ings that are obsoleted because of changesin laws or regulations. A ruling may alsobe obsoleted because the substance hasbeen included in regulations subsequentlyadopted.

Revoked describes situations where theposition in the previously published rulingis not correct and the correct position isbeing stated in a new ruling.

Superseded describes a situation wherethe new ruling does nothing more than re-state the substance and situation of a previ-ously published ruling (or rulings). Thus,the term is used to republish under the1986 Code and regulations the same po-sition published under the 1939 Code andregulations. The term is also used whenit is desired to republish in a single rul-ing a series of situations, names, etc., thatwere previously published over a period oftime in separate rulings. If the new rul-ing does more than restate the substance

of a prior ruling, a combination of termsis used. For example, modified and su-perseded describes a situation where thesubstance of a previously published rulingis being changed in part and is continuedwithout change in part and it is desired torestate the valid portion of the previouslypublished ruling in a new ruling that is selfcontained. In this case, the previously pub-lished ruling is first modified and then, asmodified, is superseded.

Supplemented is used in situations inwhich a list, such as a list of the names ofcountries, is published in a ruling and thatlist is expanded by adding further names insubsequent rulings. After the original rul-ing has been supplemented several times, anew ruling may be published that includesthe list in the original ruling and the ad-ditions, and supersedes all prior rulings inthe series.

Suspended is used in rare situations toshow that the previous published rulingswill not be applied pending some futureaction such as the issuance of new oramended regulations, the outcome of casesin litigation, or the outcome of a Servicestudy.

AbbreviationsThe following abbreviations in current useand formerly used will appear in materialpublished in the Bulletin.

A—Individual.Acq.—Acquiescence.B—Individual.BE—Beneficiary.BK—Bank.B.T.A.—Board of Tax Appeals.C—Individual.C.B.—Cumulative Bulletin.CFR—Code of Federal Regulations.CI—City.COOP—Cooperative.Ct.D.—Court Decision.CY—County.D—Decedent.DC—Dummy Corporation.DE—Donee.Del. Order—Delegation Order.DISC—Domestic International Sales Corporation.DR—Donor.E—Estate.EE—Employee.E.O.—Executive Order.

ER—Employer.ERISA—Employee Retirement Income Security Act.EX—Executor.F—Fiduciary.FC—Foreign Country.FICA—Federal Insurance Contributions Act.FISC—Foreign International Sales Company.FPH—Foreign Personal Holding Company.F.R.—Federal Register.FUTA—Federal Unemployment Tax Act.FX—Foreign corporation.G.C.M.—Chief Counsel’s Memorandum.GE—Grantee.GP—General Partner.GR—Grantor.IC—Insurance Company.I.R.B.—Internal Revenue Bulletin.LE—Lessee.LP—Limited Partner.LR—Lessor.M—Minor.Nonacq.—Nonacquiescence.O—Organization.P—Parent Corporation.PHC—Personal Holding Company.PO—Possession of the U.S.PR—Partner.

PRS—Partnership.PTE—Prohibited Transaction Exemption.Pub. L.—Public Law.REIT—Real Estate Investment Trust.Rev. Proc.—Revenue Procedure.Rev. Rul.—Revenue Ruling.S—Subsidiary.S.P.R.—Statement of Procedural Rules.Stat.—Statutes at Large.T—Target Corporation.T.C.—Tax Court.T.D. —Treasury Decision.TFE—Transferee.TFR—Transferor.T.I.R.—Technical Information Release.TP—Taxpayer.TR—Trust.TT—Trustee.U.S.C.—United States Code.X—Corporation.Y—Corporation.Z —Corporation.

March 24, 2008 i 2008–12 I.R.B.

Numerical Finding List1

Bulletins 2008–1 through 2008–12

Announcements:

2008-1, 2008-1 I.R.B. 246

2008-2, 2008-3 I.R.B. 307

2008-3, 2008-2 I.R.B. 269

2008-4, 2008-2 I.R.B. 269

2008-5, 2008-4 I.R.B. 333

2008-6, 2008-5 I.R.B. 378

2008-7, 2008-5 I.R.B. 379

2008-8, 2008-6 I.R.B. 403

2008-9, 2008-7 I.R.B. 444

2008-10, 2008-7 I.R.B. 445

2008-11, 2008-7 I.R.B. 445

2008-12, 2008-7 I.R.B. 446

2008-13, 2008-8 I.R.B. 480

2008-14, 2008-8 I.R.B. 481

2008-15, 2008-9 I.R.B. 511

2008-16, 2008-9 I.R.B. 511

2008-17, 2008-9 I.R.B. 512

2008-18, 2008-12 I.R.B. 667

2008-19, 2008-11 I.R.B. 624

2008-20, 2008-11 I.R.B. 625

Notices:

2008-1, 2008-2 I.R.B. 251

2008-2, 2008-2 I.R.B. 252

2008-3, 2008-2 I.R.B. 253

2008-4, 2008-2 I.R.B. 253

2008-5, 2008-2 I.R.B. 256

2008-6, 2008-3 I.R.B. 275

2008-7, 2008-3 I.R.B. 276

2008-8, 2008-3 I.R.B. 276

2008-9, 2008-3 I.R.B. 277

2008-10, 2008-3 I.R.B. 277

2008-11, 2008-3 I.R.B. 279

2008-12, 2008-3 I.R.B. 280

2008-13, 2008-3 I.R.B. 282

2008-14, 2008-4 I.R.B. 310

2008-15, 2008-4 I.R.B. 313

2008-16, 2008-4 I.R.B. 315

2008-17, 2008-4 I.R.B. 316

2008-18, 2008-5 I.R.B. 363

2008-19, 2008-5 I.R.B. 366

2008-20, 2008-6 I.R.B. 406

2008-21, 2008-7 I.R.B. 431

2008-22, 2008-8 I.R.B. 465

2008-23, 2008-7 I.R.B. 433

2008-24, 2008-8 I.R.B. 466

2008-25, 2008-9 I.R.B. 484

2008-26, 2008-9 I.R.B. 487

2008-27, 2008-10 I.R.B. 543

2008-28, 2008-10 I.R.B. 546

2008-29, 2008-12 I.R.B. 637

Notices— Continued:

2008-30, 2008-12 I.R.B. 638

2008-31, 2008-11 I.R.B. 592

2008-32, 2008-11 I.R.B. 593

2008-33, 2008-12 I.R.B. 642

2008-34, 2008-12 I.R.B. 645

2008-35, 2008-12 I.R.B. 647

2008-36, 2008-12 I.R.B. 650

2008-37, 2008-12 I.R.B. 654

Proposed Regulations:

REG-147290-05, 2008-10 I.R.B. 576

REG-104713-07, 2008-6 I.R.B. 409

REG-104946-07, 2008-11 I.R.B. 596

REG-111583-07, 2008-4 I.R.B. 319

REG-114126-07, 2008-6 I.R.B. 410

REG-136701-07, 2008-11 I.R.B. 616

REG-139236-07, 2008-9 I.R.B. 491

REG-141399-07, 2008-8 I.R.B. 470

REG-147832-07, 2008-8 I.R.B. 472

REG-149475-07, 2008-9 I.R.B. 510

Revenue Procedures:

2008-1, 2008-1 I.R.B. 1

2008-2, 2008-1 I.R.B. 90

2008-3, 2008-1 I.R.B. 110

2008-4, 2008-1 I.R.B. 121

2008-5, 2008-1 I.R.B. 164

2008-6, 2008-1 I.R.B. 192

2008-7, 2008-1 I.R.B. 229

2008-8, 2008-1 I.R.B. 233

2008-9, 2008-2 I.R.B. 258

2008-10, 2008-3 I.R.B. 290

2008-11, 2008-3 I.R.B. 301

2008-12, 2008-5 I.R.B. 368

2008-13, 2008-6 I.R.B. 407

2008-14, 2008-7 I.R.B. 435

2008-15, 2008-9 I.R.B. 489

2008-16, 2008-10 I.R.B. 547

2008-17, 2008-10 I.R.B. 549

2008-18, 2008-10 I.R.B. 573

2008-19, 2008-11 I.R.B. 594

2008-21, 2008-12 I.R.B. 657

2008-22, 2008-12 I.R.B. 658

2008-23, 2008-12 I.R.B. 664

Revenue Rulings:

2008-1, 2008-2 I.R.B. 248

2008-2, 2008-2 I.R.B. 247

2008-3, 2008-2 I.R.B. 249

2008-4, 2008-3 I.R.B. 272

2008-5, 2008-3 I.R.B. 271

2008-6, 2008-3 I.R.B. 271

2008-7, 2008-7 I.R.B. 419

2008-8, 2008-5 I.R.B. 340

2008-9, 2008-5 I.R.B. 342

Revenue Rulings— Continued:

2008-11, 2008-10 I.R.B. 541

2008-12, 2008-10 I.R.B. 520

2008-13, 2008-10 I.R.B. 518

2008-14, 2008-11 I.R.B. 578

2008-15, 2008-12 I.R.B. 633

2008-16, 2008-11 I.R.B. 585

2008-17, 2008-12 I.R.B. 626

Tax Conventions:

2008-8, 2008-6 I.R.B. 403

Treasury Decisions:

9368, 2008-6 I.R.B. 382

9369, 2008-6 I.R.B. 394

9370, 2008-7 I.R.B. 428

9371, 2008-8 I.R.B. 447

9372, 2008-8 I.R.B. 462

9373, 2008-8 I.R.B. 463

9374, 2008-10 I.R.B. 521

9375, 2008-5 I.R.B. 344

9376, 2008-11 I.R.B. 587

9377, 2008-11 I.R.B. 578

9382, 2008-9 I.R.B. 482

1 A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2007–27 through 2007–52 is in Internal Revenue Bulletin2007–52, dated December 26, 2007.

2008–12 I.R.B. ii March 24, 2008

Finding List of Current Actions onPreviously Published Items1

Bulletins 2008–1 through 2008–12

Announcements:

2006-88

Clarified and superseded by

Notice 2008-35, 2008-12 I.R.B. 647Notice 2008-36, 2008-12 I.R.B. 650

2008-6

Superseded by

Ann. 2008-19, 2008-11 I.R.B. 624

Notices:

2001-16

Modified by

Notice 2008-20, 2008-6 I.R.B. 406

2001-60

Modified and superseded by

Notice 2008-31, 2008-11 I.R.B. 592

2006-27


Notice 2008-35, 2008-12 I.R.B. 647

2006-28


Notice 2008-36, 2008-12 I.R.B. 650

2006-77

Clarified and amplified by

Notice 2008-25, 2008-9 I.R.B. 484

2006-107

Modified by

Notice 2008-7, 2008-3 I.R.B. 276

2007-30


Notice 2008-14, 2008-4 I.R.B. 310

2007-54

Clarified by

Notice 2008-11, 2008-3 I.R.B. 279

Proposed Regulations:

REG-209020-86

Corrected by

Ann. 2008-11, 2008-7 I.R.B. 445

REG-113891-07

Hearing scheduled by

Ann. 2008-4, 2008-2 I.R.B. 269

Revenue Procedures:

97-36

Modified by

Rev. Proc. 2008-23, 2008-12 I.R.B. 664

Revenue Procedures— Continued:

2001-23

Modified by

Rev. Proc. 2008-23, 2008-12 I.R.B. 664

2002-9

Modified by

Rev. Proc. 2008-18, 2008-10 I.R.B. 573

2007-1

Superseded by

Rev. Proc. 2008-1, 2008-1 I.R.B. 1

2007-2

Superseded by

Rev. Proc. 2008-2, 2008-1 I.R.B. 90

2007-3

Superseded by

Rev. Proc. 2008-3, 2008-1 I.R.B. 110

2007-4

Superseded by

Rev. Proc. 2008-4, 2008-1 I.R.B. 121

2007-5

Superseded by

Rev. Proc. 2008-5, 2008-1 I.R.B. 164

2007-6

Superseded by

Rev. Proc. 2008-6, 2008-1 I.R.B. 192

2007-7

Superseded by

Rev. Proc. 2008-7, 2008-1 I.R.B. 229

2007-8

Superseded by

Rev. Proc. 2008-8, 2008-1 I.R.B. 233

2007-26

Obsoleted in part by

Rev. Proc. 2008-17, 2008-10 I.R.B. 549

2007-31

Obsoleted in part by

Rev. Proc. 2008-19, 2008-11 I.R.B. 594

2007-39

Superseded by

Rev. Proc. 2008-3, 2008-1 I.R.B. 110

2007-52

Superseded by

Rev. Proc. 2008-9, 2008-2 I.R.B. 258

2008-13

Corrected by

Ann. 2008-15, 2008-9 I.R.B. 511

Revenue Rulings:

58-612

Clarified and amplified by

Rev. Rul. 2008-15, 2008-12 I.R.B. 633

Revenue Rulings— Continued:

89-42


Rev. Rul. 2008-17, 2008-12 I.R.B. 626

97-31


Rev. Rul. 2008-17, 2008-12 I.R.B. 626

2001-48


Rev. Rul. 2008-17, 2008-12 I.R.B. 626

2007-4

Supplemented and superseded by

Rev. Rul. 2008-3, 2008-2 I.R.B. 249

Treasury Decisions:

9362

Corrected by

Ann. 2008-9, 2008-7 I.R.B. 444Ann. 2008-12, 2008-7 I.R.B. 446

9363

Corrected by

Ann. 2008-10, 2008-7 I.R.B. 445

9375

Corrected by

Ann. 2008-16, 2008-9 I.R.B. 511

1 A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2007–27 through 2007–52 is in Internal Revenue Bulletin 2007–52, dated December 26,2007.

March 24, 2008 iii 2008–12 I.R.B.

INTERNAL REVENUE BULLETINThe Introduction at the beginning of this issue describes the purpose and content of this publication. The weekly Internal Revenue

Bulletin is sold on a yearly subscription basis by the Superintendent of Documents. Current subscribers are notified by the Superin-tendent of Documents when their subscriptions must be renewed.

CUMULATIVE BULLETINSThe contents of this weekly Bulletin are consolidated semiannually into a permanent, indexed, Cumulative Bulletin. These are

sold on a single copy basis and are not included as part of the subscription to the Internal Revenue Bulletin. Subscribers to the weeklyBulletin are notified when copies of the Cumulative Bulletin are available. Certain issues of Cumulative Bulletins are out of printand are not available. Persons desiring available Cumulative Bulletins, which are listed on the reverse, may purchase them from theSuperintendent of Documents.

ACCESS THE INTERNAL REVENUE BULLETIN ON THE INTERNETYou may view the Internal Revenue Bulletin on the Internet at www.irs.gov. Under information for: select Businesses. Under

related topics, select More Topics. Then select Internal Revenue Bulletins.

INTERNAL REVENUE BULLETINS ON CD-ROMInternal Revenue Bulletins are available annually as part of Publication 1796 (Tax Products CD-ROM). The CD-ROM can be

purchased from National Technical Information Service (NTIS) on the Internet at www.irs.gov/cdorders (discount for online orders)or by calling 1-877-233-6767. The first release is available in mid-December and the final release is available in late January.

HOW TO ORDERCheck the publications and/or subscription(s) desired on the reverse, complete the order blank, enclose the proper remittance,

detach entire page, and mail to the Superintendent of Documents, P.O. Box 371954, Pittsburgh PA, 15250–7954. Please allow two tosix weeks, plus mailing time, for delivery.

WE WELCOME COMMENTS ABOUT THE INTERNALREVENUE BULLETIN

If you have comments concerning the format or production of the Internal Revenue Bulletin or suggestions for improving it,we would be pleased to hear from you. You can e-mail us your suggestions or comments through the IRS Internet Home Page(www.irs.gov) or write to the IRS Bulletin Unit, SE:W:CAR:MP:T:T:SP, Washington, DC 20224

Internal Revenue ServiceWashington, DC 20224Official BusinessPenalty for Private Use, $300

Bulletin No. 2008-12 HIGHLIGHTS OF THIS ISSUE · Bulletin No. 2008-12 March 24, 2008 HIGHLIGHTS OF...

Documents

Transcript of Bulletin No. 2008-12 HIGHLIGHTS OF THIS ISSUE · Bulletin No. 2008-12 March 24, 2008 HIGHLIGHTS OF...